As filed with the Securities and Exchange Commission on May 21, 1997
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of l933
CEL-SCI CORPORATION
(Exact name of issuer as specified in its charter)
Colorado 84-0916344
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
66 Canal Center Plaza, Suite 510
Alexandria, Virginia 22314
(Address of Principal Executive (Zip Code)
Offices)
1996 Incentive Stock Option Plan
1996 Non-Qualified Stock Option Plan
(Full Title of Plan)
Geert R. Kersten
CEL-SCI Corporation
66 Canal Center Plaza, Suite 510
Alexandria, Virginia 22314
(Name and address of agent for service)
(703) 549-5293
(Telephone number, including area code, of agent for service)
Copies of all communications, including all communications sent to agent
for service to:
William T. Hart, Esq.
Hart & Trinen
l624 Washington Street
Denver, Colorado 80203
(303) 839-0061
Page one of ___ pages contained in the sequential numbering
system. The Exhibit Index may be found at page ___.
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CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered (1) per share (2) price fee
Common Stock 600,000 $3.34 $2,004,000 $ 607.28
Issuable Pursuant
to 1996 Incentive
Stock Option Plan
Common Stock 400,000 $3.34 $l,336,000 $ 404.85
Issuable Pursuant
to 1996 Non-Qualified
Stock Option Plan
l,000,000 $3,334,000 $1,012.13
(1) This Registration Statement also covers such additional
number of shares, presently undeterminable, as may become
issuable under the Plans in the event of stock dividends, stock
splits, recapitalizations or other changes in the Common Stock.
The shares subject to this Registration Statement reflect the
shares available for issuance pursuant to options granted under
the Incentive Stock Option and Non-Qualified Stock Option Plans,
all of which may be reoffered in accordance with the provisions
of Form S-8.
(2) Varied, but not less than the fair market value on the date
that the options were or are granted. Pursuant to Rule 457(g),
the proposed maximum offering price per share and proposed
maximum aggregate offering price are based upon the average bid
and asked prices of the Registrant's Common Stock on May 20,
1997.
<PAGE>
CEL-SCI CORPORATION
Cross Reference Sheet Required Pursuant to Rule 404
PART I
INFORMATION REQUIRED IN PROSPECTUS
(NOTE: Pursuant to instructions to Form S-8, the Prospectus described
below is not filed with this Registration Statement.)
Item
No. Form S-8 Caption Caption in Prospectus
1. Plan Information
(a) General Plan Information ......... Stock Option and Bonus Plans
(b) Securities to be Offered ......... Stock Option and Bonus Plans
(c) Employees who may Participate
in the Plan ...................... Stock Option and Bonus Plans
(d) Purchase of Securities Pursuant
to the Plan and Payment for
Securities Offered ............... Stock Option and Bonus Plans
(e) Resale Restrictions .............. Resale of Shares by Affili-
ates
(f) Tax Effects of Plan
Participation .................... Stock Option and Bonus Plans
(g) Investment of Funds .............. Not Applicable.
(h) Withdrawal from the Plan;
Assignment of Interest ........... Other Information Regarding
the Plans
(i) Forfeitures and Penalties ........ Other Information Regarding
the Plans
(j) Charges and Deductions and
Liens Therefore .................. Other Information Regarding
the Plans
2. Registrant Information and Employee
Plan Annual Information ............... Available Information,
Documents Incorporated by
Reference
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3 - Incorporation of Documents by Reference
The following documents filed by the Company with the
Securities and Exchange Commission are incorporated by reference
in this Registration Statement: Annual Report on Form l0-K for
the year ending September 30, 1996, Quarterly Report on Form 10-
Q for quarter ending December 31, 1996 and Proxy Statement
relating to the Company's June 3, 1997 Annual Meeting of
Shareholders. All reports and documents subsequently filed by
the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, prior to the filing of a post-
effective amendment to this Registration Statement of which this
Prospectus is a part which indicates that all securities offered
hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference
in this Prospectus and to be a part thereof from the date of
filing of such reports or documents.
Item 4 - Description of Securities
Not required.
Item 5 - Interests of Named Experts and Counsel
Not Applicable.
Item 6 - Indemnification of Directors and Officers
The Bylaws of the Company provide in substance that the
Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened or completed
action, suit or proceeding, whether civil, criminal,
administrative, or investigative by reason of the fact that such
person is or was a director, officer, employee, fiduciary or
agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee, fiduciary or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judg-
ments, fines and amounts paid in settlement actually and
reasonably incurred by such person to the full extent permitted
by the laws of the state of Colorado; and that expenses
incurred in defending any such civil or criminal action, suit or
proceeding may be paid by the Company in advance of the final
disposition of such action, suit or proceeding as authorized by
the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of such director, officer or employee
to repay such amount to the Company unless it shall ultimately
be determined that such person is entitled to be indemnified by
the Company as authorized in the Bylaws.
Item 7 - Exemption from Registration Claimed
None.
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<PAGE>
Item 8 - Exhibits
4 - Instruments Defining Rights of
Security Holders
(a) - Common Stock Incorporated by reference to
Exhibit 4(a) of the Company's
Registration Statements on
Form S-l, File Nos. 2-85547-D
and 33-7531.
(b) - 1996 Incentive Stock Option Plan
(c) - 1996 Non-Qualified Stock Option Plan
5 - Opinion Regarding Legality
l5 - Letter Regarding Unaudited Interim
Financial Information None
24 - Consent of Independent Public
Accountants and Attorneys
25 - Power of Attorney Included in the signature
page of this Registration
Statement
28 - Information from Reports None
furnished to State Insurance
Regulatory Authorities
99 - Additional Exhibits
(Re-Offer Prospectus)
Item 9 - Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section l0(a)(3)
of the Securities Act of l933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; and
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<PAGE>
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change in such information
in the registration statement;
Provided, however, that paragraphs (a)(l)(i) and
(a)(l)(ii) will not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to
Section l3 or Section l5(d) of the Securities Act of l934
(2) That, for the purpose of determining any liability
under the Securities Act of l933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
l933, each filing of the registrant's Annual Report pursuant to
Section l3(a) or Section l5(d) of the Securities Exchange Act of
l934 (and, where applicable, each filing of any employee benefit
plan's annual report pursuant to Section l5(d) of the Securities
Exchange Act of l934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
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<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
constitutes and appoints Maximilian de Clara and Geert R.
Kersten, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement, and to file
the same, with all exhibits thereto, and all other documents in
connection therewith, with the Securities and Exchange Commission
granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-infact and agents or their
substitutes or substitute may lawfully do or cause to be done by
virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-8 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Alexandria, State of Virginia, on May 15, 1997.
CEL-SCI CORPORATION
By:/s/ Maximilian De Clara
MAXIMILIAN DE CLARA, PRESIDENT
Pursuant to the requirements of the Securities Act of l933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Maximilian De Clara Director and President May l5, 1997
MAXIMILIAN DE CLARA
/s/ Geert R. Kersten Director, Principal May l5, 1997
GEERT R. KERSTEN Financial Officer and
Chief Executive Officer
/s/ Mark V. Soresi Director May l5, l997
MARK V. SORESI
/s/ F. Donald Hudson Director May l5, 1997
F. DONALD HUDSON
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<PAGE>
FORM S-8
CEL-SCI Corporation
66 Canal Center Plaza
Suite 510
Alexandria, Virginia 22314
EXHIBITS
Exhibits
4 - Instruments Defining Rights of
Security Holders
(a) - Common Stock Incorporated by reference to
Exhibit 4(a) of the Company's
Registration Statements on
Form S-l, File Nos. 2-85547-D
and 33-7531.
(b) - 1996 Incentive Stock Option Plan
(c) - 1996 Non-Qualified Stock Option Plan
5 - Opinion Regarding Legality
l5 - Letter Regarding Unaudited Interim
Financial Information None
24 - Consent of Independent Public
Accountants and Attorneys
25 - Power of Attorney Included in the signature
page of this Registration
Statement
28 - Information from Reports None
furnished to State Insurance
Regulatory Authorities
99 - Additional Exhibits
(Re-Offer Prospectus)
CEL-SCI CORPORATION
1996 INCENTIVE STOCK OPTION PLAN
l. Purpose. The purpose of the 1996 Incentive Stock Option Plan
(the "Plan") is to advance the interests of CEL-SCI Corporation
and any subsidiary corporation (hereinafter referred to as the
"Company") and all of its shareholders, by strengthening the
Company's ability to attract and retain in its employ individuals
of training, experience, and ability, and to furnish additional
incentive to officers and valued employees upon whose judgment,
initiative, and efforts the successful conduct and development of
its business largely depends, by encouraging such officers and
employees to become owners of capital stock of the Company.
This will be effected through the granting of stock
options as herein provided, which options are intended to qualify
as "Incentive Stock Options" within the meaning of Section 422
of the Internal Revenue Code, as amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer
the Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted
under the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of
a deceased optionee or the person or persons who acquire the
right to exercise an Option by bequest or inheritance or by
reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a
committee of two or more directors appointed by the Board (the
"Committee"). If a Committee should be appointed, the Committee
shall report all action taken by it to the Board. The Committee
shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom
and the time or times at which Options shall be granted and the
number of shares and purchase price of Common Stock covered by
each Option; to construe and interpret the Plan; to determine the
terms and provisions of the respective Option agreements, which
need not be identical, including, but without limitation, terms
covering the payment of the Option Price; and to make all
<PAGE>
other determinations and take all other actions deemed necessary
or advisable for the proper administration of the Plan. All such
actions and determinations shall be conclusively binding for all
purposes and upon all persons.
4. Common Stock Subject to Options. The aggregate number
of shares of the Company's Common Stock which may be issued upon the
exercise of Options granted under the Plan shall not exceed
600,000, subject to adjustment under the provisions of paragraph
9. The shares of Common Stock to be issued upon the exercise of
Options may be authorized but unissued shares, shares issued and
reacquired by the Company or shares bought on the market for the
purposes of the Plan. In the event any Option shall, for any
reason, terminate or expire or be surrendered without having
been exercised in full, the shares subject to such Option but
not purchased thereunder shall again be available for Options to
be granted under the Plan.
The aggregate fair market value (determined as of the time
any option is granted) of the stock for which any employee may be
granted options which are first exercisable in any single
calendar year under this Plan (and any other plan of the Company
meeting the requirements for Incentive Stock Option Plans) shall
not exceed $100,000.
5. Participants. Options will be granted only to persons who are
employees of the Company and only in connection with any such
person's employment. The term "employees" shall include
officers as well as other employees, and the officers and other
employees who are directors of the Company. The Committee will
determine the employees to be granted options and the number of
shares subject to each option.
6. Terms and Conditions of Options. Any Option granted under the
Plan shall be evidenced by an agreement executed by the Company
and the recipient and shall contain such terms and be in such
form as the Committee may from time to time approve, subject to
the following limitations and conditions:
(a) Option Price. The purchase price of each option shall
not be less than l00% of the fair market value of the Company's
common stock at the time of the granting of the option provided,
however, if the optionee, at the time the option is granted, owns
stock possessing more than l0% of the total combined voting power
of all classes of stock of the Company, the purchase price of
the option shall not be less than 110% of the fair market value
of the stock at the time of the granting of the option.
(b) Period of Option. The maximum period for exercising an
option shall be l0 years from the date upon which the option is
granted, provided, however, if the optionee, at the time the
option is granted, owns stock possessing more than l0% of the
total combined voting power of all classes of stock of the
Company, the maximum period for exercising an option shall be
five years from the date upon which the option is granted and
provided further, however, that these periods may be shortened
in accordance with the provisions of Paragraph 7.
Subject to the foregoing, the period during which each
option may be exercised, and the expiration date of each Option
shall be fixed by the Committee.
<PAGE>
(c) Vesting of Shareholder Rights. Neither an Optionee nor
his successor shall have any rights as a shareholder of the
Company until the certificates evidencing the shares purchased
are properly delivered to such Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable
from time to time during a period (or periods) determined by the
Committee and ending upon the expiration or termination of the
Option; provided, however, the Committee may, by the provisions
of any Option Agreement, limit the number of shares purchaseable
thereunder in any period or periods of time during which the
Option is exercisable. An Option shall not be exercisable in
whole or in part prior to the date of shareholder approval of the
Plan.
Options may be exercised in part from time to time during
the option period. The exercise of any option will be contingent
upon compliance by the Optionee (or purchaser acting pursuant to
Section 6(b)) with the provisions of Section 10 below and upon
receipt by the Company of either (i) cash or certified bank check
payable to its order in the amount of the purchase price of such
shares (ii) shares of Company stock having a fair market value
equal to the purchase price of such shares, or (iii) a
combination of (i) and (ii). If any law or regulation requires
the Company to take any action with respect to the shares to be
issued upon exercise of any option, then the date for delivery of
such stock shall be extended for the period necessary to take
such action.
(e) Nontransferability of Option. No Option shall be
transferable or assignable by an Optionee, otherwise than by
will or the laws of descent and distribution and each Option
shall be exercisable, during the Optionee's lifetime, only by
him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar
process except with the express consent of the Committee.
(f) Death of Optionee. In the event of the death of an op-
tionee while in the employ of the Company, the option theretofore
granted to him shall be exercisable only within the three months
succeeding such death and then only (i) by the person or persons
to whom the optionee's rights under the option shall pass by the
optionee's will or by the laws of descent and distribution, and
(ii) if and to the extent that he was entitled to exercise the
option at the date of his death.
7. Assumed Options. In connection with any transaction to which
Section 424(a) of the Code is applicable, options may be granted
pursuant hereto in substitution of existing options or existing
options may be assumed as prescribed by that Section and any
regulations issued thereunder. Notwithstanding anything to the
contrary contained in this Plan, options granted pursuant to
this Paragraph shall be at prices and shall contain such terms,
provisions, and conditions as may be determined by the
Committee and shall include such provisions and conditions as
may be necessary to meet the requirements of Section 424(a) of
the Code.
<PAGE>
8. Certain Dispositions of Shares. Any options granted
pursuant to this Plan shall be conditioned such that if, within
the earlier of (i) the two-year period beginning on the date of
grant of an option or (ii) the one-year period beginning on the
date after which any share of stock is transferred to an
individual pursuant to his exercise of an option, such an indivi-
dual makes a disposition of such share of stock by way of sale,
exchange, gift, transfer of legal title, or otherwise, such
individual shall promptly report such disposition to the Company
in writing and shall furnish to the Company such details
concerning such disposition as the Company may reasonably
request.
9. Reclassification, Consolidation, or Merger. If and to
the extent that the number of issued shares of Common Stock of
the Corporaton shall be increased or reduced by change in par
value, split up, reclassification, distribution of a dividend
payable in stock, or the like, the number of shares subject to
Option and the Option price per share shall be proportionately ad-
justed by the Committee, whose determination shall be conclusive.
If the Corporation is reorganized or consolidated or merged with
another corporation, an Optionee granted an Option hereunder
shall be entitled to receive Options covering shares of such
reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same
conditions. The new Option or assumption of the old Option shall
not give Optionee additional benefits which he did not have
under the old Option, or deprive him of benefits which he had
under the old Option.
10. Restrictions on Issuing Shares. The exercise of each
Option shall be subject to the condition that if at any time the
Company shall determine in its discretion that the satisfaction
of withholding tax or other withholding liabilities, or that
the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities ex-
change or under any state or federal law, or that the consent or
approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, such exercise or the
delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such
withholding, listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant
to Section 5 of the Securities Act of l933, each optionee
shall, by accepting an option, represent and agree, for himself
and his transferrees by will or the laws of descent and
distribution, that all shares of stock purchased upon the
exercise of the option will be acquired for investment and not
for resale or distribution. Upon such exercise of any portion of
an option, the person entitled to exercise the same shall, upon
request of the Company, furnish evidence satisfactory to the
Company (including a written and signed representation) to the
effect that the shares of stock are being acquired in good faith
for investment and not for resale or distribution. Furthermore,
the Company may, if it deems appropriate, affix a legend to
certificates representing shares of stock purchased upon
exercise of options indicating that such shares have not been registered
<PAGE>
with the Securities and Exchange Commission and may so notify its
transfer agent. Such shares may be disposed of by an optionee in
the following manner only: (l) pursuant to an effective
registration statement covering such resale or reoffer, (2)
pursuant to an applicable exemption from registration as indi-
cated in a written opinion of counsel acceptable to the Company,
or (3) in a transaction that meets all the requirements of Rule
l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the
Securities and Exchange Commission, no such restrictions on re-
sale shall apply, except in the case of optionees who are
directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three
aforesaid methods.
11. Use of Proceeds. The proceeds received by the Company
from the sale of Common Stock pursuant to the exercise of Options
granted under the Plan shall be added to the Company's general
funds and used for general corporate purposes.
l2. Amendment, Suspension, and Termination of Plan. The
Board of Directors may alter, suspend, or discontinue the Plan,
but may not, without the approval of a majority of those holders
of the Company's Common Stock voting in person or by proxy at
any meeting of the Company's shareholders, make any alteration or
amendment thereof which operates to (a) abolish the Committee,
change the qualification of its members, or withdraw the
administration of the Plan from its supervision, (b) make any
material change in the class of eligible employees as defined in
Section 5, (c) increase the total number of shares reserved for
purposes of this Plan except as provided in Section 9, (d)
increase the total number of shares for which an option or
options may be granted to any one employee, (e) extend the term
of the Plan or the maximum option periods provided in paragraph
6, (f) decrease the minimum option price provided in paragraph 6,
except as provided in paragraph 9, or (g) materially increase the
benefits accruing to employees participating under this Plan.
Unless the Plan shall theretofore have been terminated by
the Board, the Plan shall terminate ten years after the effective
date of the Plan. No Option may be granted during any suspension
or after the termination of the Plan. No amendment, suspension,
or termination of the Plan shall, without an Optionee's consent,
alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.
13. Limitations. Every right of action by or on behalf of
the Company or by any shareholder against any past, present or
future member of the Board, or any officer or employee of the
Company arising out of or in connection with this Plan shall,
irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, offi-
cer or employee cease and be barred by the expiration of one year
from whichever is the later of (a) the date of the act or
omission in respect of which such right of action arises; or (b)
the first date upon which there has been made generally available
to shareholders an annual report of the Company or any proxy
statement for the annual meeting of shareholders following the
issuance of such annual report, which annual report and proxy
statment alone or together set forth, for the related period, the
number of shares issuable upon
<PAGE>
the exercise of the options granted pursuant to this Plan; and
any and all right of action by any employee (past, present or
future) against the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may
be brought, cease and be barred by the expiration of one year
from the date of the act or omission in respect of which such
right of action arises.
l4. Effective Date of the Plan.
This Plan shall become effective upon the adoption thereof
by the Board of Directors of the Company.
l5. Governing Law. The Plan shall be governed by the laws
of the State of Colorado.
l6. Expenses of Administration. All costs and expenses
incurred in the operation and adminstration of this Plan shall be
borne by the Company.
CEL-SCI CORPORATION
By /s/ Geert Kersten
CEL-SCI CORPORATION
1996 NON-QUALIFIED STOCK OPTION PLAN
1. Purpose. This 1996 Non-Qualified Stock Option Plan (the "Plan")
is intended to advance the interests of CEL-SCI Corporation (the
"Company") and its shareholders, by encouraging and enabling
selected officers, directors, consultants and key employees
upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire
and retain a proprietary interest in the Company by ownership of
its stock. Options granted under the Plan are intended to be
Options which do not meet the requirements of Section 422 of the
Internal Revenue Code of l954, as amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer
the Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted
under the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of
a deceased optionee or the person or persons who acquire the
right to exercise an Option by bequest or inheritance or by
reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a
committee of two or more directors appointed by the Board (the
"Committee"). If a Committee should be appointed, the Committee
shall report all action taken by it to the Board. The Committee
shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom
and the time or times at which Options shall be granted and the
number of shares and purchase price of Common Stock covered by
each Option; to construe and interpret the Plan; to determine the
terms and provisions of the respective Option agreements, which
need not be identical, including, but without limitation, terms
covering the payment of the Option Price; and to make all other
determinations and take all other actions deemed necessary or
advisable for the proper administration of the Plan. All such
actions and determinations shall be conclusively binding for all
purposes and upon all persons.
<PAGE>
4. Common Stock Subject to Options. The aggregate number of shares
of the Company's Common Stock which may be issued upon the
exercise of Options granted under the Plan shall not exceed
400,000, subject to adjustment under the provisions of paragraph
7. The shares of Common Stock to be issued upon the exercise of
Options may be authorized but unissued shares, shares issued and
reacquired by the Company or shares bought on the market for the
purposes of the Plan. In the event any Option shall, for any
reason, terminate or expire or be surrendered without having
been exercised in full, the shares subject to such Option but
not purchased thereunder shall again be available for Options to
be granted under the Plan.
5. Participants. Options may be granted under the Plan the
Company's employees, directors and officers, and consultants or
advisors to the Company, provided however that bona fide services
shall 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.
6. Terms and Conditions of Options. Any Option granted under the
Plan shall be evidenced by an agreement executed by the Company
and the recipient and shall contain such terms and be in such
form as the Committee may from time to time approve, subject to
the following limitations and conditions:
(a) Option Price. The Option Price per share with respect
to each Option shall be determined by the Committee but shall in
no instance be less than the market value of the Common Stock.
(b) Period of Option. The period during which each option
may be exercised, and the expiration date of each Option shall be
fixed by the Committee, but, notwithstanding any provision of the
Plan to the contrary, such expiration date shall not be more than
ten years from the date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor
his successor shall have any rights as a shareholder of the
Company until the certificates evidencing the shares purchased
are properly delivered to such Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable
from time to time during a period (or periods) determined by the
Committee and ending upon the expiration or termination of the
Option; provided, however, the Committee may, by the provisions
of any Option Agreement, limit the number of shares purchaseable
thereunder in any period or periods of time during which the
Option is exercisable.
(e) Nontransferability of Option. No Option shall be
transferable or assignable by an Optionee, otherwise than by
will or the laws of descent and distribution and each Option
shall be exercisable, during the Optionee's lifetime, only by
him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar
process except with the express consent of the Committee.
(f) Death of Optionee. If an Optionee dies while holding
an Option granted hereunder, his Option privileges shall be
limited to the shares which were immediately purchasable by him
at the date of death and such Option
<PAGE>
privileges shall expire unless exercised by his successor within
four months after the date of death.
7. Reclassification, Consolidation, or Merger. If
and to the extent that the number of issued shares of Common Stock of the
Corporaton shall be increased or reduced by change in par value,
split up, reclassification, distribution of a dividend payable in
stock, or the like, the number of shares subject to Option and
the Option price per share shall be proportionately adjusted by
the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another
corporation, an Optionee granted an Option hereunder shall be
entitled to receive Options covering shares of such reorganized,
consolidated, or merged company in the same proportion, at an
equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee
additional benefits which he did not have under the old Option,
or deprive him of benefits which he had under the old Option.
8. Restrictions on Issuing Shares. The exercise of each Option
shall be subject to the condition that if at any time the Company
shall determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any shares otherwise
deliverable upon such exercise upon any securities exchange or
under any state or federal law, or that the consent or approval
of any regulatory body, is necessary or desirable as a condition
of, or in connection with, such exercise or the delivery or
purchase of shares purchased thereto, then in any such event,
such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall
have been effected or obtained free of any conditions not
acceptable to the Company.
Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant
to Section 5 of the Securities Act of l933, each optionee shall,
by accepting an option, represent and agree, for himself and his
transferrees by will or the laws of descent and distribution,
that all shares of stock purchased upon the exercise of the op-
tion will be acquired for investment and not for resale or
distribution. Upon such exercise of any portion of an option,
the person entitled to exercise the same shall, upon request of
the Company, furnish evidence satisfactory to the Company
(including a written and signed representation) to the effect
that the shares of stock are being acquired in good faith for
investment and not for resale or distribution. Furthermore, the
Company may, if it deems appropriate, affix a legend to
certificates representing shares of stock purchased upon exercise
of options indicating that such shares have not been registered
with the Securities and Exchange Commission and may so notify the
Company's transfer agent. Such shares may be disposed of by an
optionee in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer,
(2) pursuant to an applicable exemption from registration as
indicated in a written opinion of counsel acceptable to the
Company, or (3) in a transaction that meets all the requirements
of Rule l44 of the Securities and Exchange Commission. If shares
of stock covered by the Plan have been registered with the
Securities and Exchange Commission, no such restrictions on
resale shall apply, except in the case of optionees who are di-
<PAGE>
rectors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three
aforesaid methods.
9. Use of Proceeds. The proceeds received by the Company
from the sale of Common Stock pursuant to the exercise of Options
granted under the Plan shall be added to the Company's general
funds and used for general corporate purposes.
l0. Amendment, Suspension, and Termination of Plan. The
Board of Directors may alter, suspend, or discontinue the Plan,
but may not, without the approval of a majority of those holders
of the Company's Common Stock voting in person or by proxy at
any meeting of the Company's shareholders, make any alteration or
amendment thereof which operates to (a) abolish the Committee,
change the qualification of its members, or withdraw the
administration of the Plan from its supervision, (b) make any
material change in the class of eligible employees as defined in
paragraph 5, (c) increase the total number of shares reserved for
purposes of this Plan except as provided in paragraph 7, (d)
increase the total number of shares for which an option or
options may be granted to any one employee, (e) extend the term
of the Plan or the maximum option periods provided in paragraph
6, (f) decrease the minimum option price provided in paragraph 6,
except as provided in paragraph 7, or (g) materially increase the
benefits accruing to employees participating under this Plan.
Unless the Plan shall theretofore have been terminated by
the Board, the Plan shall terminate ten years after the effective
date of the Plan. No Option may be granted during any suspension
or after the termination of the Plan. No amendment, suspension,
or termination of the Plan shall, without an Optionee's consent,
alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.
11. Limitations. Every right of action by or on behalf of
the Company or by any shareholder against any past, present or
future member of the Board, or any officer or employee of the
Company arising out of or in connection with this Plan shall,
irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, offi-
cer or employee cease and be barred by the expiration of one year
from whichever is the later of (a) the date of the act or
omission in respect of which such right of action arises; or (b)
the first date upon which there has been made generally available
to shareholders an annual report of the Company or any proxy
statement for the annual meeting of shareholders following the
issuance of such annual report, which annual report and proxy
statment alone or together set forth, for the related period, the
number of shares issuable upon the exercise of the options
granted pursuant to this Plan; and any and all right of action by
any employee (past, present or future) against the Company
arising out of or in connection with this Plan shall,
irrespective of the place where such action may be brought, cease
and be barred by the expiration of one year from the date of the
act or omission in respect of which
such right of action arises.
l2. Governing Law. The Plan shall be governed by the laws
of the State of Colorado.
<PAGE>
l3. Expenses of Administration. All costs and expenses incurred in
the operation and adminstration of this Plan shall be borne by the Company.
CEL-SCI CORPORATION
By /s/ Geert Kersten
May 14, 1997
CEL-SCI Corporation
66 Canal Center Plaza
Suite 510
Alexandria, Virginia 223l4
Gentlemen:
This letter will constitute an opinion upon the legality of
the sale by CEL-SCI Corporation, a Colorado corporation, of up to
1,000,000 shares of Common Stock, all as referred to in the
Registration Statement on Form S-8 filed by the Company with the
Securities and Exchange Commission.
We have examined the Articles of Incorporation, the Bylaws
and the minutes of the Board of Directors of the Company and the
applicable laws of the State of Colorado, and a copy of the
Registration Statement. In our opinion, the Company has duly
authorized the issuance of the shares of stock mentioned above
and such shares when issued will be legally issued, fully paid,
and nonassessable.
Very truly yours,
HART & TRINEN
By /s/ William T. Hart
William T. Hart
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of CEL-SCI Corporation on Form S-8 of our report dated
November 27, l996, appear- ing in the Annual Report on Form l0-
K/A of CEL-SCI Corporation for the year ended September 30, l996.
DELOITTE & TOUCHE LLP
Washington, D.C.
May 9, l997
<PAGE>
CONSENT OF ATTORNEYS
Reference is made to the Registration Statement of CEL-SCI
Corporation on Form S-8 whereby the Company proposes to sell
1,000,000 shares of the Company's Common Stock. Reference is
also made to Exhibit 5 included in the Registration Statement
relating to the validity of the securities proposed to be issued
and sold.
We hereby consent to the use of our opinion concerning the
validity of the securities proposed to be issued and sold.
Very truly yours,
HART & TRINEN
By /s/ William T. Hart
William T. Hart
Denver, Colorado
May 14, 1997
CEL-SCI CORPORATION
Common Stock
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Prospectus relates to approximately 2,016,500 shares (the
"Shares") of common stock (the "Common Stock") of CEL-SCI
Corporation (the "Company") which may be issued pursuant to
certain employee incentive plans adopted by the Company. The
employee incentive plans provide for the grant, to selected
employees of the Company and other persons, of either stock
bonuses or options to purchase shares of the Company's Common
Stock. Persons who received Shares pursuant to the Plans and who
are offering such Shares to the public by means of this
Prospectus are referred to as the "Selling Shareholders".
The Company has Incentive Stock Option Plans, Non-
Qualified Stock Option Plans and a Stock Bonus Plan. The Company
also has outstanding options which were granted pursuant to the
terms of a stock option plan which was terminated in 1992 (the
"1987 Stock Option and Bonus Plan"). In some cases the plans
described above are collectively referred to as the "Plans". The
terms and conditions of any stock bonus and the terms and
conditions of any options, including the price of the shares of
Common Stock issuable on the exercise of options, are governed by
the provisions of the respective Plans and the stock bonus or
stock option agreements between the Company and the Plan
participants.
The Selling Shareholders may offer the shares from time
to time in negotiated transactions in the over-the-counter
market, at fixed prices which may be changed from time to time,
at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
The Selling Shareholders may effect such transactions by selling
the Shares to or through securities broker/dealers, and such
broker/dealers may receive compensation in the form of discounts,
concessions, or commissions from the Selling Shareholders and/or
the purchasers of the Shares for whom such broker/dealers may act
as agent or to whom they sell as principal, or both (which
compensation as to a particular broker/dealer might be in excess
of customary commissions). See "Selling Shareholders" and "Plan
of Distribution".
None of the proceeds from the sale of the Shares by the
Selling Shareholders will be received by the Company. The
Company has agreed to bear all expenses (other than underwriting
discounts, selling commissions and fees and expenses of counsel
and other advisers to the Selling Shareholders). The Company has
agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").
The date of this Prospectus is May , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and in
accordance therewith, files reports and other information with
the Securities and Exchange Commission (the "Commission"). Proxy
statements, reports and other information concerning the Company
can be inspected and copied at Room 1024 of the Commission's
office at 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Commission's Regional Offices in New York (7 World Trade Center,
Suite l300, New York, New York 10048), and Chicago (Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511), and copies of such material can be ob-
tained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Certain information concerning the Company is also available at
the Internet Web Site maintained by the Securities and Exchange
Commission at www.sec.gov. This Prospectus does not contain all
information set forth in the Registration Statement of which this
Prospectus forms a part and exhibits thereto which the Company
has filed with the Commission under the Securities Act and to
which reference is hereby made.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will provide, without charge, to each person to
whom a copy of this Prospectus is delivered, including any
beneficial owner, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by
reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into
this Prospectus). Requests should be directed to:
CEL-SCI Corporation
66 Canal Center Plaza
Suite 510
Alexandria, Virginia 223l4
(703) 549-5293
Attention: Secretary
The following documents filed with the Commission by the
Company (Commission File No. 0-11503) are hereby incorporated by
reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K/A for the
fiscal year ended September 30, 1996; and
(2) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1996.
(3) Proxy Statement relating to the June 3, 1997 Annual
Meeting of Shareholders.
All documents filed with the Commission by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the
termination of the offering registered hereby shall be deemed to
be incorporated by reference into this Prospectus
<PAGE>
and to be a part hereof from the date of the filing of such
documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for the purposes of this Prospectus to
the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
<PAGE>
TABLE OF CONTENTS
PAGE
THE COMPANY ............................................ 5
RECENT DEVELOPMENTS CONCERNING THE COMPANY WHICH HAVE
NOT BEEN REFLECTED IN REPORTS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ................................ 6
RISK FACTORS ........................................... 7
DILUTION AND COMPARATIVE SHARE DATA .................... 11
USE OF PROCEEDS ........................................ 15
SELLING SHAREHOLDERS ................................... 15
PLAN OF DISTRIBUTION ................................... 18
DESCRIPTION OF COMMON STOCK ............................ 19
GENERAL ................................................ 19
<PAGE>
THE COMPANY
CEL-SCI Corporation (the "Company") was formed as a Colorado
corporation in 1983. The Company is involved in the research
and development of certain drugs and vaccines. The Company's
first product, MULTIKINETM, manufactured using the Company's
proprietary cell culture technologies, is a combination, or
"cocktail", of natural human interleukin-2 ("IL-2") and certain
lymphokines and cytokines. MULTIKINE is being tested to
determine if it is effective in improving the immune response of
advanced cancer pantients. The Company's second product, HGP-30,
is being tested to determine if it is an effective treatment/
vaccine against the AIDS virus. In addition, the Company
recently acquired a new patented T-cell Modulation Process which
uses "heteroconjugates" to direct the body to chose a specific
immune response. The Company intends to use this new
technology to improve the cellular immune response of persons
vaccinated with HGP-30 and to develop a potential tuberculosis
("TB") treatment/vaccine.
Before human testing can begin with respect to a drug or
biological product, preclinical studies are conducted in
laboratory animals to evaluate the potential efficacy and the
safety of a product. Human clinical studies generally involve a
three-phase process. The initial clinical evaluation, Phase I,
consists of administering the product and testing for safe and
tolerable dosage levels. Phase II trials continue the
evaluation of immunogenicity and determine the appropriate dosage
for the product, identify possible side effects and risks in a
larger group of subjects, and provide preliminary indi- cations
of efficacy. Phase III trials consist of testing for actual
clinical efficacy for safety within an expanded group of patients
at geographically dispersed test sites.
In March 1995, the Canadian Health Protection Branch, Health
and Welfare Ministry gave clearance to the Company to start a
phase I/II cancer study using MULTIKINE. The study, which will
enroll up to 30 head and neck cancer patients who have failed
conventional treatments, will be conducted at several sites in
the United States and Canada and is designed to evaluate safety,
tumor responses and immune responses in patients treated with
multiple courses of MULTIKINE. The length of time that each
patient will remain on the investigational treatment will
depend on the patient's response to treatment.
In February 1996 the FDA authorized the Company to conduct
two human clinical studies using MULTIKINE and focusing on
prostate and head and neck cancer. The prostate study is being
conducted at Jefferson Hospital in Philadelphia, Pennsylvania
and will involve up to 15 prostate cancer patients who have
failed on hormonal therapy. The head and neck cancer study will
involve up to 30 cancer patients who have failed using
conventional therapies. The head and neck cancer study in the
U.S. is being conducted in conjunction with the Company's
Canadian head and neck cancer study.
Viral Technologies, Inc. ("VTI"), a wholly-owned subsidiary
of the Company, is engaged in the development of a possible
treatment/vaccine for AIDS. VTI's technology may also have
application in the treatment of AIDS-infected individuals and
the diagnosis of AIDS. VTI's AIDS treatment/ vaccine,
<PAGE>
HGP-30, has completed certain Phase I human clinical trials. In
the Phase I trials, the vaccine was administered to volunteers
who were not infected with the HIV virus in an effort to
determine safe and tolerable dosage levels.
In April 1995 VTI, with the approval of the
California Department of Health Services Food and Drug Branch
(FDB), began another clinical trial in California using
volunteers who received two vaccinations. The volunteers re-
ceiving the two lowest dosage levels were asked to donate blood
for a SCID mouse HIV challenge study. The SCID mouse is
considered to be the best available animal model for HIV
because it lacks its own immune system and therefore permits
human cell growth. White blood cells from the five (5)
vaccinated volunteers and from normal donors were injected into
groups of SCID mice. They were then challenged with high levels
of a different strain of the HIV virus than the one from which
HGP-30 is derived. Infection by virus was determined and
confirmed by two different assays, p24 antigen, a component of
the virus core, and reverse transcriptase activity, an enzyme
critical to HIV replication. Approximately 78% of the SCID mice
given blood from vaccinated volunteers showed no HIV infection
after virus challenge as compared to 13% of the mice given blood
from unvaccinated donors.
Product licensure in a foreign country or under
state authority does not mean that the product will be licensed
by the FDA and there are no assurances that the Company or VTI
will receive any approval of the FDA or any other governmental
entity for the manufacturing and/or marketing of a product. Con-
sequently, the commencement of the manufacturing and marketing by
the Company or VTI of any product is, in all likelihood, many
years away.
The lack of government approval for the Company's
or VTI's products will prevent the Company and VTI from generally
marketing their products. Delays in obtaining government
approval or the failure to obtain government approval may have a
material adverse impact upon the Company's operations.
All of the Company's products are in the early
stages of development. The Company does not expect to develop
commercial products for several years, if at all. The Company
has had operating losses since its inception, had an accumulated
deficit of approximately $(31,577,000) at December 31, 1996, and
expects to incur substantial losses for the foreseeable future.
The Company's executive offices are located at 66
Canal Center Plaza, Suite 510, Alexandria, Virginia 22314, and
its telephone number is (703) 549-5293.
As of March 31, 1997 the Company had 9,444,628
shares of Common Stock issued and outstanding.
RECENT DEVELOPMENTS CONCERNING THE COMPANY WHICH HAVE NOT
BEEN REFLECTED IN REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
Acquisition of MULTIKINE Technology
The MULTIKINE technology being tested by the
Company was developed by a group of researchers and was assigned,
during l980 and l98l, to Hooper
<PAGE>
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 a separate registration statement.
RISK FACTORS
The securities offered hereby represent a speculative
investment and involve a high degree of risk. Therefore,
prospective investors should read this Prospectus and carefully
consider, among others, the following risk factors in addition
to the other information set forth in this Prospectus prior to
making an investment.
Offering Proceeds. This Offering is being made by certain
Selling Shareholders. The Company will not receive any proceeds
from the sale of the shares by the Selling Shareholders.
Lack of Revenues and History of Loss. The Company has had
only limited revenues since it was formed in 1983. Since the
date of its formation and through December 31, 1996, the Company
has incurred net losses of approximately $(31,577,000). During
the years ended September 30, 1994, 1995 and 1996
<PAGE>
the Company suffered losses of $(4,426,876), $(3,878,638) and
$(6,326,666) respectively. The Company has relied principally
upon the proceeds of public and private sales of securities to
finance its activities to date. All of the Company's potential
products are in the early stages of development, and any
commercial sale of these products will be many years away.
Accordingly, the Company expects to incur substantial losses for
the foreseeable future.
Need for Additional Capital. Clinical and other studies
necessary to obtain approval of a new drug can be time consuming
and costly, especially in the United States, but also in foreign
countries. The different steps ne- cessary to obtain regulatory
approval, especially that of the Food and Drug Administration
("FDA"), involve significant costs. The Company expects that it
will need additional financing in order to fund the costs of
future clinical trials, related research, and general and
administrative expenses. The Company may be forced to delay or
postpone development and research expenditures if the Company is
unable to secure adequate sources of funds. These delays in
development may have an adverse effect on the Company's ability
to produce a timely and competitive product. There can be no
assurance that the Company will be able to obtain additional
funding from other sources.
Viral Technologies, Inc. ("VTI"), a wholly-owned subsididary
of the Company, is dependent upon funding from the Company for
its operations and research programs.
Cost Estimates. The Company's estimates of the costs
associated with future clinical trials and research may be
substantially lower than the actual costs of these activities.
If the Company's cost estimates are incorrect, the Company will
need additional funding for its research efforts.
Government Regulation - FDA Approval. Products which may be
developed by the Company or Viral Technologies, Inc. (or which
may be developed by affiliates or licensees) will require
regulatory approvals prior to sale. In particular, therapeutic
agents and diagnostic products are subject to approval, prior to
general marketing, by the FDA in the United States and by
comparable agencies in most foreign countries. The process of
obtaining FDA and corresponding foreign approvals is costly and
time consuming, particularly for pharmaceutical products such
as those which might ultimately be developed by the Company,
Viral Technologies, Inc. or its licensees, and there can be no
assurance that such approvals will be granted. Any failure to
obtain or any delay in obtaining such approvals may adversely
affect the ability of potential licensees or the Company to
successfully market any products developed. Also, the extent of
adverse government regulations which might arise from future
legislative or administrative action cannot be predicted. The
clinical trial which the Company's affiliate, Viral Technologies,
Inc., is conducting in California is regulated by government
agencies in California and obtaining approvals from states for
clinical trials is likewise expensive and time consuming.
Dependence on Others to Manufacture Product. The Company
has an agreement with an unrelated corporation for the
production, until 1997, of MULTIKINE for research and testing
purposes. At present, this is the Company's
<PAGE>
only source of MULTIKINE. If this corporation could not, for any
reason, supply the Company with MULTIKINE, the Company estimates
that it would take approximately six to ten months to obtain
supplies of MULTIKINE under an alternative manufacturing
arrangement. The Company does not know what cost it would incur
to obtain this alternative source of supply.
Technological Change. The biomedical field in which the
Company is involved is undergoing rapid and significant
technological change. The successful development of
therapeutic agents and diagnostic products from the compounds,
compositions and processes licensed to the Company, through
Company financed research or as a result of possible licensing
arrangements with pharmaceutical or other companies, will
depend on its ability to be in the technological forefront of
this field. There can be no assurance that the Company will
achieve or maintain such a competitive position or that other
technological developments will not cause the Company's
proprietary technologies to become uneconomical or obsolete.
Patents. Since 1983 the Company has filed applications for
United States and foreign patents covering certain aspects of the
technology. As of the date of this Prospectus nine patents have
been issued in the United States and four patents have been
issued in Europe. There is no assurance that the applications
still pending or which may be filed in the future will result in
the issuance of any patents. Furthermore, there is no assurance
as to the breadth and degree of protection any issued patents
might afford the owners of the patents and the Company. Disputes
may arise between the Company and others as to the scope,
validity and ownership rights of these or other patents. Any
defense of the patents could prove costly and time consuming and
there can be no assurance that the Company will be in a position,
or will deem it advisable, to carry on such a defense. Other
private and public concerns, including uni- versities, may have
filed applications for, or may have been issued, patents and are
expected to obtain additional patents and other proprietary
rights to technology potentially useful or necessary to the
Company. The scope and validity of such patents, if any, the
extent to which the Company may wish or need to acquire the
rights to such patents, and the cost and availability of such
rights are presently unknown. Also, as far as the Company relies
upon unpatented proprietary technology, there is no assurance
that others may not acquire or independently develop the same or
similar technology. The Company's first patent will expire in
the year 2000. Since the Company's IND application relating to
MULTIKINE has only recently been cleared by the FDA, and since
the Company does not know if it will ever be able to sell
Multikine on a commercial basis, the Company cannot predict what
effect the expiration of this patent will have on the Company.
Notwithstanding the above, the Company believes that later issued
patents will protect the technology associated with Multikine
past the year 2000.
Product Liability and Lack of Insurance. Although the
Company has product liability insurance for MULTIKINE and its HGP-
30 vaccines, the successful prosecution of a product liability
case against the Company could have a materially adverse effect
upon its business if the amount of any judgment exceeds the
Company's insurance coverage.
<PAGE>
Dependence on Management and Scientific Personnel. The
Company is dependent for its success on the continued
availability of its executive officers. The loss of the
services of any of the Company's executive officers could have an
adverse effect on the Company's business. The Company does not
carry key man life insurance on any of its officers. The
Company's future success will also depend upon its ability to
attract and retain qualified scientific personnel. There can be
no assurance that the Company will be able to hire and retain
such necessary personnel.
Shares Available for Resale. As of March 3l, 1997, there were
9,444,628 shares of the Company's Common Stock issued and
outstanding. Approximately 150,000 of these shares (excluding
the shares offered by this prospectus) have not been registered
under the Securities Act of l933, as amended (the "Act"), and are
"restricted securities" as defined by Rule l44 of the Act. Rule
l44 provides, in essence, that shareholders, after holding
restricted securities for a period of one year may, every three
months, sell in ordinary brokerage transactions an amount equal
to the greater of l% of the Company's then outstanding Common
stock or the average weekly trading volume, if any, of the stock
during the four calendar weeks preceding the sale. Non-
affiliates of the Company who hold restricted securities for a
period of two years may, under certain prescribed conditions,
sell their securities without regard to any of the requirements
of the Rule. As of the date of this Prospectus, substantially
all shares of restricted stock were available for resale pursuant
to Rule l44. Sales of restricted stock may have a depressive
effect on the market price of the Company's Common Stock. Such
sales might also impede future financing by the Company.
Options, Warrants and Convertible Securities. The Company
has issued options, warrants and other convertible securities
("Derivative Securi- ties") which allow the holders to acquire
additional shares of the Company's Common Stock. In some cases
the Company has agreed that, at its expense, it will make
appropriate filings with the Securities and Exchange Commission
so that the securities underlying certain Derivative Securities
will be available for public sale. Such filings could result in
substantial expense to the Company and could hinder future
financings by the Company.
For the terms of these Derivative Securities, the holders
thereof will have an opportunity to profit from any increase in
the market price of the Company's Common Stock without assuming
the risks of ownership. Holders of such Derivative Securities
may exercise and/or convert them at a time when the Company could
obtain additional capital on terms more favorable than those
provided by the Derivative Securities. The exercise or
conversion of the Derivative Securities will dilute the voting
interest of the owners of presently outstanding shares of the
Company's Common Stock and may adversely affect the ability of
the Company to obtain additional capital in the future. The sale
of the shares of Common Stock issuable upon the exercise or
conversion of the Derivative Securities could adversely affect
the market price of the Company's stock. See "Dilution and
Comparative Share Data".
Competition. The competition in the research, development
and commercialization of products which may be used in the
prevention or treatment of cancer and AIDS is intense. Major
pharmaceutical and chemical companies, as
<PAGE>
well as specialized genetic engineering firms, are developing
products for these diseases. Many of these companies have
substantial financial, research and development, and marketing
resources and are capable of providing signifi- cant long-term
competition either by establishing in-house research groups or by
forming collaborative ventures with other entities. In addition,
both smaller companies and non-profit institutions are active in
research relating to cancer and AIDS and are expected to become
more active in the future.
Lack of Dividends. There can be no assurance that the
operations of the Company will result in any revenues or will be
profitable. At the present time, the Company intends to use
available funds to finance any possible growth of the Company's
business. Accordingly, while payment of dividends on the
Company's Common Stock rests within the discretion of the Board
of Directors, no common stock dividends have been declared or
paid by the Company. The Company does not presently intend to
pay dividends on its common stock and there can be no assurance
that dividends will ever be paid.
Dilution. Persons purchasing the securities offered by this
Prospectus will suffer an immediate dilution in the per share
net tangible book value of their Common Stock.
Preferred Stock. The Company's Articles of Incorporation
authorize the Company's Board of Directors to issue up to 200,000
shares of Preferred Stock. The provisions in the Company's
Articles of Incorporation relating to the Preferred Stock would
allow the Company's directors to issue Preferred Stock with
multiple votes per share and dividends rights which would have
priority over any dividends paid with respect to the Company's
Common Stock. The issuance of Preferred Stock with such rights
may make the removal of management difficult even if such removal
would be considered beneficial to shareholders generally, and
will have the effect of limiting shareholder participation in
certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.
DILUTION AND COMPARATIVE SHARE DATA
As of March 31, 1997, the Company had 9,444,628 shares of
its Common Stock outstanding with a net tangible book value
(total assets less total liabilities and intangible assets) of
approximately $0.90 per share.
The net tangible book value of a share of the Company's
Common Stock is substantially less than the price which investors
will pay for the shares offered by this Prospectus. The
difference between the price paid by persons who purchase the
Securities offered by this Prospectus and the net tangible book
value of the Company's Common Stock is the dilution attributable
to each share of Common Stock.
"Net tangible book value per share" is the amount that
results from subtracting the total liabilities and intangible
assets of the Company from its total assets and dividing such
amount by the shares of Common Stock then outstanding.
<PAGE>
The following table reflects the additional shares
which may be issued as a result of the exercise of outstanding
options and warrants or the conversion of other securities
issued by the Company.
Number of Note
Shares Reference
Outstanding as of March 31, 1997 9,444,628
Other Shares Which May Be Issued:
Shares issuable upon conversion of
the Company's Series C preferred stock,
assuming conversion price of
$4.00 per share 587,500 A
Shares issuable upon exercise of
Series A and Series B Warrants 759,526 A
Shares issuable upon conversion of Series
B Preferred stock, assuming conversion
price of $4.00 per share 62,500 B
Shares issuable upon exercise of warrants
to be held by former holders of the
Company's Series B Preferred Stock.
99,750 B
Shares issuable upon exercise of
warrants issued to Selling Agent,
or its assigns, in connection
with the Company's June and
September 1995 Private Offerings 16,120 C
Shares issuable upon exercise of
warrants issued to Selling Agent,
or its assigns, in connection
with the Company's August 1996
Private Offering 15,355 D
Shares issuable upon exercise of
warrants sold in Company's 1992
Public Offering 1,035,000 E
Shares issuable upon exercise of
options granted to Company's officers,
directors, employees and consultants 1,235,550 F
Shares outstanding (pro forma basis) 13,255,929
<PAGE>
A. In December 1996 the Company raised $2,850,000 from the sale
of units consisting of 2,850 shares of the Comany's Series C
Preferred Stock, 379,763 Series A Warrants and 379,763 Series B
Warrants. The Series C Preferred Shares are convertible into
shares of the Company's Common Stock on the basis of one share of
Preferred Stock for shares of Common Stock equal in number to the
amount determined by dividing $1,000 by the 85% of Closing Price
of the Company's Common Stock (the "Conversion Price"). The term
"Closing Price" is defined as the average closing bid price of
the Company's Common Stock over the five-day trading period
ending on the day prior to the conversion of the Preferred Stock.
Beginning 90 days after December 17, 1996, one half of the
Series C Preferred Shares are convert- ible into shares of the
Company's common stock. All preferred shares are convertible
into shares of the Company's common stock beginning 180 days
after December 17, 1996, provided however that if the closing bid
price of the Company's common stock trades for more than $8.00 at
any time, then all shares of Preferred Stock will thereafter be
immediately convertible into shares of the Company's common
stock. Notwithstanding the above, the Conversion Price may not
be more than $4.00. Any Preferred Shares which are outstanding
on December 15, 1998 will be automatically converted into shares
of the Company's Common Stock, provided that the shares of Common
Stock issuable upon the conversion of the Preferred Shares have
been registered for public sale and the Company's Common Stock is
listed on a national exchange. Each Series A Warrant entitles
the holder to purchase one share of the Company's common stock at
a price fo $4.50 per share at any time prior to March 15, 1998.
Each Series B Warrant entitles the holder to purchase one share
of the Company's common stock at a price of $4.50 per share at
any time prior to March 15, 1999. By means of a separate
Registration Statement, the shares issuable upon the conversion
of the Series C Preferred Shares and the exercise of the Warrants
are being offered for public sale. In March 1997 500 Series C
Preferred Shares were converted into 125,000 shares of the
Company's common stock.
B. In August 1996 the Company sold, in a private transaction,
5,000 shares of its Series B Preferred Stock (the "Preferred
Shares") for $5,000,000 or $1,000 per share. At the purchasers'
option, up to 2,500 Preferred Shares were convertible, on or
after November 7, 1996 (the "Effective Date"), into shares of the
Company's Common Stock on the basis of one share of Preferred
Stock for shares of Common Stock equal in number to the amount
determined by dividing $1,000 by 87% of the Closing Price of the
Company's Common Stock. All Preferred Shares are convertible, on
or after 40 days from the Effective Date, on the basis of one
share of Preferred Stock for shares of the Company's Common Stock
equal in number of the amount determined by dividing $1,000 by
85% of the Closing Price of the Company's Common Stock. The term
"Closing Price" is defined as the average closing bid price of
the Company's Common Stock over the five-day trading period
ending on the day prior to the conversion of the Preferred Stock.
Notwithstanding the above, the conversion price may not be less
than $3.60 nor more than $14.75. The Preferred Shares, if issued,
are entitled to a quarterly divi- dend of $17.50 per share. Any
Preferred Shares which are outstanding on November 7, 1998 will
be automatically converted into shares of the Com- pany's Common
Stock. By means of a separate Registration Statement filed with
the Securities and Exchange Commission, the shares issuable upon
the conversion of the Series B Preferred Shares have bee registered for
<PAGE>
public sale. Prior to December 20, 1996 1,900 Series B Preferred
Shares were converted into 527,774 shares of the Company's common
stock. In December 1996 the Company repurchased 2,850 Series B
Preferred Shares for $2,850,000 plus warrants which allow the
holders to purchase up to 99,750 shares of the Company's common
stock for $4.25 per share at any time prior to December 15, 1999.
The Company raised the funds required for this repurchase from
the sale of its Series C Preferred Stock.
C. In connection with the Company's June and September Private
Offerings, Neidiger/Tucker/Bruner, Inc., the Sales Agent for
these offerings, received a commission, a non-accountable expense
allowance and warrants to purchase (i) 57,500 shares of the
Company's Common Stock at $2.00 per share, (ii) 57,500 shares at
$2.40 per share, and (ii) an additional 115,000 shares at $3.25
per share. Prior to the date of this Prospectus the Sales Agent
(and/or its assigns) collectively exercised Warrants pertaining
to 213,880 shares of the Company's Common Stock. By means of a
separate Registration Statement, the shares of Common Stock
issuable upon the exercise of the remaining Warrants issued to
the Sales Agent have been registered for public sale.
D. In connection with the Company's August l996 Private
Offering, Shoreline Pacific Institutional Finance, the Sales
Agent for such offering, received a commission plus warrants to
purchase 15,355 shares of the Company's Com- mon Stock at $6.51
per share. By means of a separate Registration State- ment, the
shares of Common Stock issuable upon the exercise of the Warrants
issued to the Sales Agent (or its assigns) have been registered
for public sale.
E. In connection with the Company's February, 1992 public
offering, the Company issued 5,175,000 Warrants. Every five
Warrants entitle the holder to purchase one share of the
Company's Common Stock at a price of $6.00 per share prior to
February 7, 1998. The Company, upon 30-days notice, may
accelerate the expiration date of the Warrants, provided,
however, that at the time the Company gives such notice of
acceleration (1) the Company has in effect a current registration
statement covering the shares of Common Stock issuable upon the
exercise of the Warrants and (2) at any time during the 30 day
period preceding such notice, the average closing bid price of
the Company's Common Stock has been at least 20% higher than the
warrant exercise price for 15 consecutive trading days. If the
expiration date is accelerated, all Warrants not exercised within
the 30-day period will expire. The exercise price of the
Warrants may not be increased during the term of the Warrants,
but the exercise price may be decreased at the dis- cretion of
the Company's Board of Directors by giving each Warrant holder
notice of such decrease. The exercise period for the Warrants
may be extended by the Company's Board of Directors giving
notice of such extension to each Warrant holder of record.
F. The options are exercisable at prices ranging from $2.38 to
$19.70 per share. The Company may also grant options to purchase
740,907 additional shares under its Incentive Stock Option and
Non-Qualified Stock Option Plans.
<PAGE>
USE OF PROCEEDS
All of the shares offered by this Prospectus are being
offered by certain owners of the Company's Common Stock (the
Selling Shareholders) and were issued by the Company in
connection with the Company's employee stock bonus or stock
option plans. None of the proceeds from this offering will be
received by the Company. Expenses expected to be incurred by the
Company in connection with this offering are estimated to be
approximately $10,000. The Selling Shareholders have agreed to
pay all commissions and other compensation to any securities
broker/dealers through whom they sell any of the Shares.
SELLING SHAREHOLDERS
The Company has issued (or may in the future issue) shares
of its common stock to various persons pursuant to certain
employee incentive plans adopted by the Company. The employee
incentive plans provide for the grant, to selected employees of
the Company and other persons, of either stock bonus- es or
options to purchase shares of the Company's Common Stock.
Persons who received Shares pursuant to the Plans and who are
offering such Shares to the public by means of this Prospectus
are referred to as the "Selling Share- holders".
The Company has adopted a number of Stock Option Plans as
well as 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 Plans. The Company has three
Incentive Stock Option Plans which 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 In
centive Stock Option Plan.
Non-Qualified Stock Option Plans. The Company has four Non-
Qualified Stock Option Plans which collectively authorize the
issuance of up to l,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. The Company has a Stock Bonus Plan which
allows for the issuance of up to 40,000 shares of Common Stock.
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.
<PAGE>
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.
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. 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.
Adjustment of Exercise Prices. 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.
Option Summary. The following sets forth certain
information, as of March 3l, 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 Remaining
Reserved for 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.
<PAGE>
The following table summarizes the options granted
to the Company's officers, directors, employees and consultants
pursuant to the Plans:
Name of Shares Subject to Options Which
Option Holder Have Been Granted to Date (1)
Maximilian de Clara 148,333
Geert R. Kersten 518,750
Patricia B. Prichep 96,000
M. Douglas Winship 67,000
Eyal Talor, Ph.D 76,666
Prem Sarin, Ph.D 34,500
Daniel Zimmerman, Ph.D 15,000
Mark Soresi 111,500
F. Donald Hudson 99,000
Employees and Consultants
to Company 68,801
(1) The options issued to the Company's officers and directors
are exercisable at prices ranging from $2.38 to $5.62 per share.
The other options issued to certain employees of and consultants
to the Company are exercisable at prices ranging from $2.38 to
$19.70 per share.
Shares issuable upon the exercise of options
granted to the Company's officers and directors pursuant to the
Plans, as well as shares issued pursuant to the Stock Bonus Plan,
are being offered by means of this Prospectus. The following
table provides certain information concerning the shareholdings
of the Company's officers and directors and the shares offered by
means of this Prospectus.
Number of Shares
Number of Number of Shares to be Beneficial-
Name of Shares Being Offered ly Owned on Com- Percent
Selling Beneficial- Bonus Option pletion of the of
Shareholder ly Owned Shares Shares(2) Offering Class
Maximilian de Clara -- -- 148,333 -- --
Geert R. Kersten 104,940 -- 518,750 104,940 5.6%
Patricia B. Prichep 3,030 -- 96,000 3,030 *
M. Douglas Winship -- -- 67,000 -- --
Eyal Talor, Ph.D 1,500 1,500 76,666 -- --
Prem Sarin, Ph.D -- -- 34,500 -- --
Daniel Zimmerman, Ph.D -- 15,000 -- -- --
Mark V. Soresi 1,875 -- 111,500 1,875 *
F. Donald Hudson -- -- 99,000 -- --
* Less than 1%.
(1) Includes shares held in trusts for the benefit of Mr. Kersten's children.
(2) Represents shares issued or issuable upon exercise of stock options.
<PAGE>
Mr. de Clara and Mr. Kersten are officers and directors of
the Company. Ms. Prichep, Mr. Winship and Dr. Talor are
officers of the Company. Mr. Soresi and Mr. Hudson are directors
of the Company.
Each Selling Shareholder has represented that the Shares
were purchased for investment and with no present intention of
distributing or reselling such Shares. However, in recognition
of the fact that holders of restricted securities may wish to
be legally permitted to sell their Shares when they deem
appropriate, the Company has filed with the Commission under the
Securities Act of 1933 a Form S-8 registration statement of
which this Prospectus forms a part with respect to the resale of
the Shares from time to time in the over-the-counter market or in
privately negotiated transactions.
Certain of the Selling Shareholders, their associates and
affiliates may from time to time be employees of, customers of,
engage in transactions with, and/or perform services for the
Company or its subsidiaries in the ordinary course of business.
PLAN OF DISTRIBUTION
The Selling Shareholders may sell the Shares offered by this
Prospectus from time to time in negotiated transactions in the
over-the-counter market at fixed prices which may be changed from
time to time, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at
negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker/ dealers,
and such broker/dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling
Shareholders and/or the purchasers of the Shares for which such
broker/dealers may act as agent or to whom they may sell, as
principal, or both (which compensation as to a particular
broker/dealer may be in excess of customary compensation).
The Selling Shareholders and any broker/dealers who act in
connection with the sale of the Shares hereunder may be deemed to
be "underwriters" within the meaning of 2(11) of the Securities
Acts of 1933, and any commissions received by them and profit
on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders and
any securities broker/dealers who may be deemed to be
underwriters against certain liabilities, including liabilities
under the Securities Act as underwriters or otherwise.
The Company has advised the Selling Shareholders that they
and any securities broker/dealers or others who may be deemed to
be statutory underwriters will be subject to the Prospectus
delivery requirements under the Securities Act of 1933. The
Company has also advised each Selling Shareholder that in the
event of a "distribution" of the shares owned by the Selling
Shareholder, such Selling Shareholder, any "affiliated
purchasers", and any broker/ dealer or other person who
participates in such distribution may be subject to Rule 10b-6
under the Securities Exchange Act of 1934 ("1934 Act") until
their participation in that distribution is completed. A
"distribution" is defined
<PAGE>
in Rule 10b-6 as an offering of securities "that is distinguished
from ordinary trading transactions by the magnitude of the
offering and the presence of special selling efforts and
selling methods". The Company has also advised the Selling
Shareholders that Rule 10b-7 under the 1934 Act prohibits any
"stabilizing bid" or "stabilizing purchase" for the purpose of
pegging, fixing or stabilizing the price of the Common Stock in
connection with this offering.
Rule 10b-6 makes it unlawful for any person who is
participating in a distribution to bid for or purchase stock of
the same class as is the subject of the distribution. If Rule
10b-6 applies to the offer and sale of any of the Shares, then
participating broker/dealers will be obligated to cease market-
making activities nine business days prior to their participation
in the offer and sale of such Shares and may not recommence
market-making activities until their participation in the
distribution has been completed. If Rule 10b-6 applies to one or
more of the principal market-makers in the Company's Common
Stock, the market price of such stock could be adversely
affected. See "RISK FACTORS".
DESCRIPTION OF COMMON STOCK
The shares of Common Stock offered by this Prospectus are
fully paid and non-assessable. Holders of the Common Stock do
not have preemptive rights. Each stockholder is entitled to one
vote for each share of Common stock held of record by such
stockholder. There is no right to cumulate votes for election
of directors. Upon liquidation of the Company, the assets then
legally available for distribution to holders of the Common Stock
will be distributed ratably among such shareholders in proportion
to their stock holdings. Holders of Common Stock are entitled to
dividends when, as and if declared by the Board of Directors out
of funds legally available therefor.
GENERAL
The Company's Bylaws provide that the Company will indemnify
its directors and officers against expense and liabilities they
incur to defend, settle or satisfy any civil or criminal action
brought against them as a result of their being or having been
Company directors or officers unless, in any such action, they
have acted with gross negligence or willful misconduct. Officers
and Directors are not entitled to be indemnified for claims or
losses resulting from a breach of their duty of loyalty to the
Company, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or a
transaction from which the director derived an improper per-
sonal benefit. Insofar as indemnification for liabilities
arising under the Securities Act of l933 may be permitted to the
Company's directors and officers, the Company has been informed
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act of l933, and is, therefore, unenforceable.
No dealer, salesman, or any other person has been authorized
to give any information or to make any representations other than
those contained in this prospectus in connection with this
offering and, if given or made, such information or
representations must not be relied upon as having been author-
ized by the Company or the selling shareholders. This prospectus
does not constitute an offer to sell, or a solicitation of any
offer to buy, the securities
<PAGE>
offered in any jurisdiction to any person to whom it is unlawful
to make an offer or solicitation. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has not been any
change in the affairs of the Company since the date hereof or
that any information contained herein is correct as to any time
subsequent to its date.
All dealers effecting transactions in the registered
securities, whether or not participating in this distribution,
may be required to deliver a prospectus. This is an addition to
the obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
