SCHEDULE 14A
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 Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CEL-SCI CORPORATION
(Name of Registrant as Specified In Its Charter)
William T. Hart - Attorney for Registrant
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] 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:
______________________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________
[ ] 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 No.:
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3) Filing Party:
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4) Date Filed:
___________________________________
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 3, 1997
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, 22314 on June 3
1997, 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 ratify the 1995 sale of 1,150,000 shares of common stock
and 1,150,000 common stock purchase warrants to unaffiliated
investors, as set forth in the accompanying Proxy Statement.
(3) to ratify the appointment of Deloitte & Touche as the
Company's independent accountants for the fiscal year ending
September 30, 1997;
(4) to transact such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on April 30, 1997 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 April 30, 1997, there were 9,646,600
shares of the Company's Common Stock issued and outstanding.
CEL-SCI CORPORATION
May 2, 1997 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 3, l997, 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 2, 1997.
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 ratify the 1995 sale of common stock and warrants,
and to ratify the appointment of Deloitte & Touche as the Company
independent accountants for the fiscal year ending September 30, 1997.
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, 1997,
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.
Number of Percent of
Name and Address Shares (1) Class (3)
Maximilian de Clara 55,000 *
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland
Geert R. Kersten 540,024 (2) 5.6%
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Patricia B. Prichep 51,197 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
M. Douglas Winship 20,334 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Eyal Talor, Ph.D. 23,000 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 223l4
Prem Sarin, Ph.D. 21,667 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 22314
Daniel Zimmerman, Ph.D. 4,000 *
66 Canal Center Plaza
Suite 510
Alexandria, VA 22314
Mark Soresi 43,375 *
l0l0 Wayne Ave., 8th Floor
Silver Spring, MD 209l0
F. Donald Hudson 29,000 *
53 Mt. Vernon Street
Boston, MA 02108
Sittona Company B.V. 751,678 7.8%
c/o Vuille & Partner
Rechtsanwalte/Avocats
Dufour Strasse 58
8702 Zollikon
Switzerland
All Officers and Directors
as a Group (9 persons) 787,597 7.6%
*Less than 1%
(1) Includes shares issuable prior to August 31, 1997 upon the
exercise of options or warrants granted to the following
persons:
Options or Warrants Exercisable
Name Prior to August 31,l997
Maximilian de Clara 55,000
Geert R. Kersten 435,084
Patricia B. Prichep 48,167
M. Douglas Winship 20,334
Eyal Talor, Ph.D. 21,500
Prem Sarin, Ph.D. 21,667
Daniel Zimmerman, Ph.D. 4,000
Mark Soresi 41,500
F. Donald Hudson 29,000
(2) 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.
(3) Amount excludes shares which may be issued upon the exercise
of other options, warrants and convertible securities previously
issued by the Company.
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
Name Age Position
Maximilian de Clara 68 Director and President
Geert R. Kersten, Esq. 38 Director, Chief Executive
Officer, Secretary and
Treasurer
Patricia B. Prichep 45 Vice President of Operations
M. Douglas Winship 48 Vice President of Regulatory
Affairs and Quality Assurance
Eyal Talor, Ph.D. 41 Vice President of Research
and Manufacturing
Prem S. Sarin, Ph.D. 62 Vice President of Research,
Infectious Diseases
Daniel H. Zimmerman, Ph.D. 55 Vice President of Research,
Cellular Immunology
Mark V. Soresi 44 Director
F. Donald Hudson 63 Director
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).
Eyal Talor, Ph.D. 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 (19911993) 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, Infectious Diseases, 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 to 1992. From 1975 to 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 to 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 to 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.
All of the Company's officers devote substantially all of their
time on the Company's business. Messrs. Soresi and Hudson, as directors,
devote only a minimal amount of time to the Company.
The Company's Board of Directors met eight times during the year
ending September 30, 1996. All of the Directors attended each of these
meetings. The Company has an Audit Committee comprised of Mr. Kersten and
Mr. Hudson. 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,
1996, the Audit Committee met once. 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 on three occasions during the fiscal year ending
September 30, 1996. All members of the Compensation Committee attended
these meetings. 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, 1996.
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)
Maximilian 1996 $225,000 $75,000 $85,016 - 70,000 - $88
de Clara, 1995 - - $95,181 - 225,000 - -
President 1994 - - $93,752 - 70,000 - -
Geert R.
Kersten, 1996 $172,531 $75,000 $9,420 - 294,000 - $8,869
Chief Exec-
utive 1995 $164,801 - $ 9,426 - 224,750 - $3,911
Officer,
Secretary 1994 $182,539 - $ 8,183 - 50,000 - $4,497
and Treasurer
M. Douglas
Winship, 1996 $119,100 - $2,400 - - - $2,488
Vice Presi-
dent of 1995 $113,500 - $ 1,200 - 22,000 - $2,100
Regulatory Affairs
and Quality Assurance
Prem S.
Sarin 1996 $102,379 - - - 32,000 - $3,160
Vice Presi-
dent of Research,
Infectious Diseases
Eyal Talor,1996 $107,458 - $3,000 - 8,000 - $3,312
Vice President
of Research and
Manufacturing
(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, 1996, 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:
Name Shares Value
Maximilian de Clara - --
Geert R. Kersten 95,940 $551,655
M. Douglas Winship - --
Prem S. Sarin - --
Eyal Talor 1,500 $8,625
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.
(5) The shares of Common Stock to be received upon the exercise of all
stock options granted during the period covered by the Table. Includes
certain options issued in connection with the Company's l996 Salary
Reduction Plan as well as certain options purchased from the Company.
See "Options Granted During Fiscal Year Ending September 30, l996"
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 life insurance permiums and/or
contributions made by the Company to a 401(k) pension plan on behalf of
persons named in the 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 1996 expenses for this plan were
$29,779. 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 and Mr. Hudson. See Stock
Options below for additional information concerning options granted to the
Company's directors.
Employment Contracts
Effective January 2, 1996, the Company entered into a three-year
employment agreement with Mr. de Clara. The employment agreement provides
that during the period between January 2, 1996 and January 2, 1997, the
Company will pay Mr. de Clara an annual salary of $300,000. During the
years ending January 2, 1998 and 1999, the Company will pay Mr. de Clara a
salary of $330,000 and $363,000 respectively. In the event that there is a
material reduction in Mr. de Clara's authority, duties or activities, or in
the event there is a change in the control of the Company, then the
agreement allows Mr. de Clara 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.
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, 1996, Mr. de Clara was the only officer participating
in deliberations of the Company's compensation committee concerning
executive officer compensation. See Item 13 of this report for information
concerning transactions between the Company and Mr. de Clara.
During the year ended September 30, 1996, 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, 1996, to the persons
named below, and the fiscal year-end value of all unexercised options
(regardless of when granted) held by these persons.
Options Granted During Fiscal Year Ending September 30, l996
Individual Grants Potential
Realizable Value at
% of Total Assumed Annual Rates
Options of Stock Price
Granted to Exercise Expir- Appreciation for
Options Employees in Price Per ation Option Term (3)
Name Granted (#) Fiscal Year Share Date 5% 10%
Maximilian
de Clara 70,000 l6.5% $5.62 9/25/06 $247,l00 $626,500
Geert R.
Kersten 224,000 (1) 53.0% $2.38 1/10/00 $333,760 $848,960
20,000 (2) 4.7% $3.25 2/21/99 $40,800 $104,800
50,000 4.8% $5.62 9/25/06 $l76,500 $447,500
M. Douglas
Winship -- -- -- -- --
- --
Prem S.
Sarin 20,000 (1) 4.7% $2.38 1/10/00 $29,800 $75,000
12,000 2.8% $5.62 9/25/06 $42,360 $l07,400
Eyal Talor 8,000 (1) l.9% $2.38 1/10/00 $11,920 $30,320
(1) Options were granted in accordance with the Company's 1996 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.
(2) Option was acquired in connection with the purchase of 20,000 shares of
the Company's common stock in February l996. In this transaction, Mr.
Kersten paid $2.50 for one share of common stock and one option. The
options are exercisable at $3.25 per share and expire on February 2l,
l999.
(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%.
Option Exercises and Year End Option Values
Value of
Unexercised
In-the-
Number of Money Options
Unexercised at Fiscal
Shares Options (3) Year-End (4)
Acquired On Value Rea- Exercisable/ Exercisable/
Name Exercise (1) lized (2) Unexercisable Unexercisable
Maximilian de Clara 146,667 $574,486 8,334/139,999 $15,668/$164,031
Geert R. Kersten - - 183,417/335,333 $504,974/$904,686
M. Douglas Winship - - 13,667/8,333 $37,694/$20,626
Prem S. Sarin 10,000 $ 71,900 834/33,666 $1,568/$72,092
Eyal Talor 7,834 $ 32,354 5,167/21,500 $9,714/$55,506
(1) The number of shares received upon exercise of options during the
fiscal year ended September 30, 1996.
(2) With respect to options exercised during the Company's fiscal year
ended September 30, 1996, 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, 1996,
separated between those options that were exercisable and those options
that were not exercisable.
(4) For all unexercised options held as of September 30, 1996, the
aggregate dollar value of the excess of the market value of the stock
underlying those options (as of September 30, 1996) 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, 1996.
Stock Option and Bonus Plans
The Company has Incentive Stock Option Plans, 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".
Incentive Stock Option Plan. The Incentive Stock Option Plans
collectively authorize the issuance of up to 800,000 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 Non-Qualified Stock Option
Plans collectively authorize the issuance of up to 1,360,000 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 NonQualified 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 nonemployee 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 March 31, 1997, concerning the stock options granted by the Company.
Each option represents the right to purchase one share of the Company's
Common Stock.
Total Shares
Shares Reserved for Remaining
Reserved Outstanding Options
Name of Plan Under Plan Options Under Plan
1987 Stock Option and Bonus Plan 200,000 7,000 (1)
1992 Incentive Stock Option Plan 100,000 83,216 2,783
1992 Non-Qualified Stock Option Plan 60,000 34,500 -
1994 Incentive Stock Option Plan 100,000 100,000 -
1994 Non-Qualified Stock Option Plan 100,000 50,583 2,750
1995 Non-Qualified Stock Option Plan 800,000 631,751 63,874
1996 Incentive Stock Option Plan 600,000 158,500 441,500
1996 Non-Qualified Stock Option Plan 400,000 170,000 230,000
TOTAL: 1,235,550 740,907
(1) This Plan was terminated in 1992 and as a result, no new options will
be granted pursuant to this Plan.
As of March 31, 1997, 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 MULTIKINE technology being tested by the Company was developed
by a group of researchers 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"). The MULTIKINE technology 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 required Sittona to pay Hooper and Shanksville royalties on
income received by Sittona with respect to the MULTIKINE technology. In
l983, Sittona licensed the MULTIKINE Technology to the Company and received
from the Company a $1,400,000 advance royalty payment. At such time as the
Company generated revenues from the sale or sublicense of this technology,
the Company was 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, was required to pay to those companies a minimum of l0% of any
royalty payments received from the Company. The license agreement with
Sittona also required the Company to bear the expense of preparing, filing
and processing patent applications and to obtain and maintain patents in
the United States and foreign countries on all inventions, developments and
improvements made by or on behalf of the Company relating to the MULTIKINE
technology. The license was to remain in effect until the expiration or
abandonment of all patent rights or until the MULTIKINE technology entered
into the public domain, whichever was later.
Prior to October, 1996, Maximilian de Clara, an Officer, Director
and shareholder of the Company, owned 50% and 30%, respectively, of Hooper
and Shanksville. Between 1985 and October 1996 Mr. de Clara owned all of
the issued and outstanding stock of Sittona. In October 1996, Mr. de Clara
disposed of his interest in Hooper, Shanksville and Sittona.
In January 1997 Hooper and Shanksville sold all of their rights in
the MULTIKINE technology to Sittona. Immediately following these
transactions, Sittona sold all of its rights in the MULTIKINE technology to
the Company, including all rights acquired from Hooper and Shanksville, in
consideration for $500,000 in cash and 751,678 shares of the Company's
common stock. The shares of the Company's Common Stock acquired by Sittona
as a result of this transaction are being offered to the public by means of
Registration Statement which was declared effective by the Securities and
Exchange Commission on March 19, 1997.
Compensation Committee Report on Executive Compensation
The Company's Compensation Committee (the "Committee") establishes
and monitors policies and procedures and approves compensation and stock
option programs affecting the Company's executive officers.
The Compensation committee's compensation policies applicable to
the Company's executive officers, including the relationship of corporate
performance to executive compensation, is designed to link the compensation
received by officers to the achievement of specific goals for the Company
and its business, to appreciation in the price of the Company's Common
Stock, and, in certain instances, to the achievement of individual goals.
It is the intent of the executive compensation program to focus executive
officers on factors that drive the Company's success and the creation of
incremental stockholder value.
The key components of the Company's executive compensation program
include annual base salaries and long-term incentive compensation
consisting of stock options. It is the Committee's policy to target
compensation (i.e., base salary, stock option grants and other benefits)
for the executive officers at approximately at the median of comparable
companies in the biotechnology field. Accordingly, the Committee
periodically reviews data on compensation practices followed by other
companies in the biotechnology industry. It is the Committee's belief that
the 1996 total compensation provided to the Company's executive officers is
consistent with the Committee's policy of providing compensation at median
market levels.
Compensation paid to executives may exceed or fall below the median
competitive levels both annually and over time based on a variety of
factors, including the Company's financial performance, the performance of
the Company's Common Stock, the performance of the executive's area of
responsibility, the Committee's assessment of an executive's individual
performance, the executive's experience in his or her role, and the
executive's length of service with the Company.
The Committee does not use financial or stockholder value
performance comparisons to determine the compensation of the Company's
executive officers since it is the Committee's opinion that the Company's
financial performance and stockholder value are influenced to a meaningful
degree by external factors and as a result comparing the executive
officers' compensation to the Company's financial or stock price
performance can be misleading.
The Company's long term incentive program consists exclusively of
periodic grants of stock options with an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant. To
encourage retention, the ability to exercise options granted under the
program is subject to vesting restrictions. Decisions made regarding the
timing and size of option grants take into account Company and individual
performance, "competitive market" practices, and the size of the option
grants made in prior years. The weighting of these factors varies and is
subjective. Current option holdings are not considered when granting
options.
The compensation paid to Geert R. Kersten, the Company's Chief
Executive Officer, for the year ended December 31, 1996 was based upon the
1994 employment contract between the Company and Mr. Kersten. Since the
terms of the employment contract govern the compensation paid to Mr.
Kersten, there is no relationship between the Company's performance to Mr.
Kersten's compensation for the last completed fiscal year. During the past
two years Mr. Kersten, in accordance with the Company's salary reduction
program, agreed to reduce a portion of the compensation payable to Mr.
Kersten pursuant to his employment contract in exchange for stock options.
The foregoing report has been approved by all members of the
committee:
Maximilian de Clara
Mark V. Soresi
F. Donald Hudson
Stockholder Return Performance Graph
Set forth below is a line graph comparing the yearly percentage
change in the cumulative total stockholder return on the Company's Common
Stock with the cumulative total return of the S&P 500 Stock Index and the
Biotechnology peer group for the five fiscal years ending September 30,
1996.
(Graph will appear here.)
The members of the peer group used for purposes of the foregoing
comparison, and their respective trading symbols, are: Pharmos Corp
(PARS), Alpha 1 Biomedicals, Inc., (ALBM), Interferon Sciences, Inc.,
(IFSC), Immune Response Corp. Del. (IMNR), and T Cell Sciences, Inc.,
(TCEL).
PROPOSAL TO APPROVE SALE OF COMMON STOCK AND WARRANTS
In June 1995 the Company, in a private offering, sold 575,000
units at a price of $2.00 per unit. Each unit consisted of one share of
the Company's common stock and one warrant. Each Warrant entitled the
holder to purchase one additional share of the Company's common stock at a
price of $3.25 per share at any time prior to June 30, 1997. In September
1995, the Company, in a separate private offering, sold another 575,000
units at a price of $2.00 per unit. The units sold in the September 1995
offering were identical to the units sold in the June 1995 offering. In
addition, the investors in the June and September 1995 offerings were the
same.
Immediately prior to the June l995 offering, the Company had
4,l88,244 shares of common stock issued and outstanding. When considering
the June and September 1995 offerings together, and giving effect to the
shares of common stock which were subsequently issued upon the exercise of
the warrants which comprised a part of the units, the Company sold
2,300,000 shares of its common stock in these offerings.
The Company did not solicit stockholder approval for the June and
September 1995 offerings since neither the Colorado Business Corporation
Act nor the Company's Articles of Incorporation required such approval.
Notwithstanding the above the rules of NASDAQ Stock Market
requires a company whose securities are listed on the NASDAQ National
Market System to obtain shareholder approval if more than 20% of such a
company's securities are to be sold in a private offering and below the
market price of the company's securities. The NASD determined that (i) the
Company's June and September 1995 offerings were a single private offering,
(ii) the shares of the Company's Common Stock sold in these offerings
exceeded 20% of the then outstanding shares of the Company's Common Stock
and (iii) the shares of the Company's Common Stock sold in the June and
September 1995 offerings were sold at a price below the then prevailing
market price of the Company's Common Stock. Since the Company did not
obtain shareholder approval for the June and September 1995 offerings the
NASD determined that the Company had violated its rule with respect to
private offerings and transferred the listing of the Company's securities
from the NASDAQ National Market System to the NASDAQ SmallCap Market.
The Company has had discussions with the American Stock Exchange
concerning the listing of the Company's securities. As part of these
discussions, the staff of the American Stock Exchange has requested that
the Company obtain shareholder approval of the sale of the common stock and
warrants in the June and September l995 offerings.
If the majority of the shareholders present in person or by proxy
at the annual meeting do not approve this proposal, the Company does not
intend to rescind the sale of the common stock and warrants or to modify
the terms pertaining to the sale of these securities in any way. If the
majority of the shareholders approve the June and September l995 offerings,
there can be no assurance that the Company will be successful in having its
securities approved for listing on the American Stock Exchange.
The Company is requesting stockholder approval of the sale of the
units in the June and September l995 offerings. The Company's Board of
Directors believes that approval of this Proposal is in the best interests
of both the Company and its stockholders and unanimously recommends that
stockholders vote "FOR" this Proposal.
The following table reflects the high and low bid prices of the
Company's common stock between June and September l995.
High Low
June l995 $5.50 $2.78
July l995 $4.93 $3.87
August l995 $4.l2 $3.56
September l995 $5.47 $3.56
APPOINTMENT OF 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 1997 fiscal year. Deloitte & Touche served as the the Company's
independent public accountants for the fiscal year ended September 30,
1996. 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, 1996 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 1998 annual meeting of shareholders
must be received by the Secretary of the Company no later than January 3,
1998.
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 1996 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 3,
1997, 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 abovenamed 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
(2) To ratify the 1995 sale of 1,150,000 shares of common stock
and 1,150,000 common stock purchase warrants.
/ / FOR / / AGAINST / / ABSTAIN
(3) To ratify the appointment of Deloitte & Touche as the Company's
independent accounts for the fiscal year ending September 30,
1997.
/ / 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 3.
Dated this ___ day of ____________, 1997.
________________________________________
(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.
