As filed with the Securities and Exchange Commission on June 24, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UnderThe 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.)
8229 Boone Blvd., Suite 802
Vienna, Virginia 22182
---------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
Incentive Stock Option Plans
Non-Qualified Stock Option Plans
Stock Bonus Plans
--------------------------------
(Full Title of Plan)
Geert R. Kersten
CEL-SCI Corporation
8229 Boone Blvd., Suite 802
Vienna, Virginia 22182
-------------------------------------
(Name and address of agent for service)
(703) 506-9460
------------------------------------------
(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>
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 300,000 $4.94 $1,482,000 $438
Issuable Pursuant
to Incentive Stock
Option Plan
Common Stock 1,400,000 $4.94 $6,916,000 $2,040
Issuable Pursuant
to Non-Qualified
Stock Option Plans
Common Stock Issuable 100,000 $4.94 $494,000 $146
Pursuant to Stock Bonus
Plans
--------- ---------- ------
1,800,000 $8,892,000 $2,624
========= ========== ======
- ------------------------------------------------------------------------------
(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 (i) options granted under the Incentive Stock
Option and Non-Qualified Stock Option Plans, and (ii) shares granted pursuant to
the Company's Stock Bonus 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 June 23, 1998.
<PAGE>
CEL-SCI CORPORATION
Cross Reference Sheet Required Pursuant to Rule 404
PART 1
IINFORMATION 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 Affiliates
(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, 1997, report on Form 10-Q
for the quarter ending December 31, 1997, report on Form 10-Q for quarter ending
March 31, 1998 and Proxy Statement relating to the Company's May 29, 1998 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), judgments, 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.
<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 Non-Qualified Stock Option Plan, ---------------------------------
as amended
(c) - 1998 Incentive Stock Option Plan ----------------------------------
(d) - 1998 Non-Qualified Stock Option Plan ----------------------------------
(e) - 1998 Stock Bonus Plan ----------------------------------
5 - Opinion Regarding Legality ----------------------------------
l5 - Letter Regarding Unaudited Interim
Financial Information None
23 - Consent of Independent Public
Accountants and Attorneys ----------------------------------
24 - Power of Attorney Included in the signature page
of this Registration Statement
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
(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.
<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-in-fact 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 June 23, 1998.
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 June 23, 1998
- ------------------------
MAXIMILIAN DE CLARA
/s/ Geert R. Kersten Director,Principal June 23, 1998
- -------------------- Financial Officer and
GEERT R. KERSTEN Chief Executive Officer
- -------------------- Director June 23, l998
MARK V. SORESI
/s/ Donald Hudson Director June 23, 1998
- --------------------
F. DONALD HUDSON
<PAGE>
FORM S-8
CEL-SCI Corporation
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22182
EXHIBITS
<PAGE>
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 Non-Qualified Stock Option Plan, --------------------------------
as amended
(c) - 1998 Incentive Stock Option Plan --------------------------------
(d) - 1998 Non-Qualified Stock Option Plan --------------------------------
(e) - 1998 Stock Bonus Plan --------------------------------
5 - Opinion Regarding Legality --------------------------------
l5 - Letter Regarding Unaudited Interim
Financial Information None
23 - Consent of Independent Public
Accountants and Attorneys --------------------------------
24 - Power of Attorney Included in the signature page
of this Registration Statement
99 - Additional Exhibits
(Re-Offer Prospectus) --------------------------------
<PAGE>
EXHIBIT 4(b)
<PAGE>
CEL-SCI CORPORATION
1996 NON-QUALIFIED STOCK OPTION PLAN
(As amended)
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.
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 1,500,000, 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
purchasable 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
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 Corporation 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 transferees 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 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 directors, 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, officer 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 statement 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.
l3. Expenses of Administration. All costs and expenses incurred in
the operation and administration of this Plan shall be borne by the Company.
CEL-SCI CORPORATION
By------------------------
<PAGE>
EXHIBIT 4(c)
<PAGE>
CEL-SCI CORPORATION
1998 INCENTIVE STOCK OPTION PLAN
l. Purpose. The purpose of the 1998 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 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 300,000, 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 ll0% 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 pro- visions
of Paragraphs 6 or 7 below.
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.
(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
purchasable 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 de- scent
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 optionee
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.
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 individual 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 Corporation 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.
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 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 transferees 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 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 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 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, officer 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 statement 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.
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 administration of this Plan shall be borne by the Company.
CEL-SCI CORPORATION
By-------------------------
<PAGE>
EXHIBIT 4(d)
<PAGE>
CEL-SCI CORPORATION
1998 NON-QUALIFIED STOCK OPTION PLAN
1. Purpose. This 1998 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.
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 300,000, 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 par 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
purchasable thereunder in any period or periods of time during which the Option
is exercisable.
(e) Nontransferability of Option. No Option shall be transfer-
able 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
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 Corporation 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 transferees 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 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 directors, 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, officer 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 statement 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.
l3. Expenses of Administration. All costs and expenses incurred in
the operation and administration of this Plan shall be borne by the Company.
CEL-SCI CORPORATION
By -------------------------
<PAGE>
EXHIBIT 4(e)
<PAGE>
CEL-SCI CORPORATION
STOCK BONUS PLAN
l. Purpose. The purpose of this Plan is 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, to keep personnel of experience and
ability in the employ of the Company and to compensate them for their
contributions to the growth and profits of the Company and thereby induce them
to continue to make such contributions in the future.
2. Definitions.
A. "Board" shall mean the board of directors of the Company.
B. "Committee" means the directors duly appointed to
administer the Plan.
C. "Plan" shall mean this Stock Bonus Plan.
D. "Bonus Share" shall mean the shares of common stock of the
Company reserved pursuant to Section 4 hereof and any such shares issued to a
Recipient pursuant to this Plan.
E. "Recipient" shall mean any individual rendering services
for the Company to whom shares are granted pursuant to this Plan.
3. Administration of Plan. The Plan shall be administered by a
committee of two or more directors appointed by the Board (the "Committee"). 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
Bonus Shares shall be granted and the number of Bonus Shares; to construe and
interpret the Plan; 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.
4. Bonus Share Reserve. There shall be established a Bonus Share
Reserve to which shall be credited 100,000 shares of the Company's common stock.
In the event that the shares of common stock of the Company should, as a result
of a stock split or stock dividend or combination of shares or any other change,
or exchange for other securities by reclassification, reorganization, merger,
consolidation, recapitalization or otherwise, be increased or decreased or
changed into or exchanged for, a different number or kind of shares of stock or
other securities of the Company or of another corporation, the number of shares
<PAGE>
then remaining in the Bonus Share Reserve shall be appropriately adjusted to
reflect such action. Upon the grant of shares hereunder, this reserve shall be
reduced by the number of shares so granted. Distributions of Bonus Shares may,
as the Committee shall in its sole discretion determine, be made from authorized
but unissued shares or from treasury shares. All authorized and unissued shares
issued as Bonus Shares in accordance with the Plan shall be fully paid and
nonassessable and free from preemptive rights.
5. Eligibility, and Granting and Vesting of Bonus Shares. Bonus Shares
may be granted under the Plan to 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.
The Committee, in its sole discretion, is empowered to grant to an
eligible Participant a number of Bonus Shares as it shall determine from time to
time. Each grant of these Bonus Shares shall become vested according to a
schedule to be established by the Committee directors at the time of the grant.
For purposes of this plan, vesting shall mean the period during which the
recipient must remain an employee or provide services for the Company. At such
time as the employment of the Recipient ceases, any shares not fully vested
shall be forfeited by the Recipient and shall be returned to the Bonus Share
Reserve. The Committee, in its sole discretion, may also impose restrictions on
the future transferability of the bonus shares, which restrictions shall be set
forth on the notification to the Recipient of the grant.
The aggregate number of Bonus Shares which may be granted pursuant
to this Plan shall not exceed the amount available therefore in the Bonus Share
Reserve.
6. Form of Grants. Each grant shall specify the number of Bonus Shares
subject thereto, subject to the provisions of Section 5 hereof.
At the time of making any grant, the Committee shall advise the
Recipient by delivery of written notice, in the form of Exhibit A hereto
annexed.
7. Recipients' Representations.
A. The Committee may require that, in acquiring any Bonus Shares,
the Recipient agree with, and represent to, the Company that the Recipient is
acquiring such Bonus Shares for the purpose of investment and with no present
intention to transfer, sell or otherwise dispose of shares except such
distribution by a legal representative as shall be required by will or the laws
of any jurisdiction in winding-up the estate of any Recipient. Such shares shall
be transferable thereafter only if the proposed transfer shall be permissible
pursuant to the Plan and if, in the opinion of counsel (who shall be
satisfactory to the Committee), such transfer shall at such time be in
compliance with applicable securities laws.
<PAGE>
B. To effectuate Paragraph A above, the Recipient shall deliver to
the Committee, in duplicate, an agreement in writing, signed by the Recipient
, in form and substance as set forth in Exhibit B hereto annexed, and the
Committee shall forthwith acknowledge its receipt thereof. 8. Restrictions
Upon Issuance.
A. Bonus Shares shall forthwith after the making of any
representations required by Section 6 hereof, or if no representations are
required then within thirty (30) days of the date of grant, be duly issued and
transferred and a certificate or certificates for such shares shall be issued in
the Recipient's name. The Recipient shall thereupon be a shareholder with
respect to all the shares represented by such certificate or certificates, shall
have all the rights of a shareholder with respect to all such shares, including
the right to vote such shares and to receive all dividends and other
distributions (subject to the provisions of Section 7(B) hereof) paid with
respect to such shares. Certificates of stock representing Bonus Shares shall be
imprinted with a legend to the effect that the shares represented thereby are
subject to the provisions of this Agreement, and to the vesting and transfer
limitations established by the Committee, and each transfer agent for the common
stock shall be instructed to like effect with respect of such shares.
B. In the event that, as the result of a stock split or stock dividend or
combination of shares or any other change, or exchange for other securities, by
reclassification, reorganization, merger, consolidation, recapitalization or
otherwise, the Recipient shall, as owner of the Bonus Shares subject to
restrictions hereunder, be entitled to new or additional or different shares of
stock or securities, the certificate or certificates for, or other evidences of,
such new or additional or different shares or securities, together with a stock
power or other instrument of transfer appropriately endorsed, shall also be
imprinted with a legend as provided in Section 7(A), and all provisions of the
Plan relating to restrictions herein set forth shall thereupon be applicable to
such new or additional or different shares or securities to the extent
applicable to the shares with respect to which they were distributed.
C. The grant of any Bonus Shares 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 Bonus Shares 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, the issuance of any Bonus Shares, 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.
<PAGE>
D. Unless the Bonus Shares covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each Recipient shall, by accepting a Bonus Share,
represent and agree, for himself and his transferees by will or the laws of
descent and distribution, that all Bonus Shares were 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 Committee,
furnish evidence satisfactory to the Committee (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
Committee may, if it deems appropriate, affix a legend to certificates
representing Bonus Shares indicating that such Bonus 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 a Recipient 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 Bonus Shares 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 Recipients who are
directors, officers, or principal shareholders of the Company. Such persons may
dispose of shares only by one of the three aforesaid methods.
9. Limitations. Neither the action of the Company in establishing the
Plan, nor any action taken by it nor by the Committee under the Plan, nor any
provision of the Plan, shall be construed as giving to any person the right to
be retained in the employ of the Company.
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 action may be brought and
irrespective of the place of residence of any such director, officer 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 statement alone or together set forth, for the
related period, the number of shares issued 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 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.
<PAGE>
l0. Amendment, Suspension or Termination of the 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 4, (d) extend
the term of the Plan or, (e) materially increase the benefits accruing to
persons 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
Bonus Share may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without a
recipient's consent, alter or impair any of the rights or obligations under any
Bonus Share theretofore granted to such recipient under the Plan.
ll. Governing Law. The Plan shall be governed by the laws of the
State of Colorado.
l2. Expenses of Administration. All costs and expenses incurred in
the operation and administration of this Plan shall be borne by the Company.
CEL-SCI CORPORATION
By--------------------------
<PAGE>
- EXHIBIT A -
CEL-SCI CORPORATION
STOCK BONUS PLAN
TO: Recipient:
PLEASE BE ADVISED that CEL-SCI Corporation has on the date hereof
granted to the Recipient the number of Bonus Shares as set forth under and
pursuant to the Stock Bonus Plan. Before these shares are to be issued, the
Recipient must deliver to the Committee that administers the Stock Bonus
Plan an agreement in duplicate, in the form as Exhibit B hereto. The Bonus
Shares are issued subject to the following vesting and transfer
limitations.
Vesting:
-------
Number of Shares Date of Vesting
--------------- ---------------
Transfer Limitations:
--------------------
CEL-SCI CORPORATION
By-------------------------
------------
Date
<PAGE>
- EXHIBIT B -
CEL-SCI Corporation
8229 Boone Blvd., Suite 802
Vienna, Virginia 22182
Gentlemen:
I represent and agree that said Bonus Shares are being acquired by me
for investment and that I have no present intention to transfer, sell or
otherwise dispose of such shares, except as permitted pursuant to the Plan
and in compliance with applicable securities laws, and agree further that
said shares are being acquired by me in accordance with and subject to the
terms, provisions and conditions of said Plan, to all of which I hereby
expressly assent. These agreements shall bind and inure to the benefit of
my heirs, legal representatives, successors and assigns.
My address of record is:
and my social security number: .
Very truly yours,
Receipt of the above is hereby acknowledged.
CEL-SCI CORPORATION
By--------------------
----------
Date its----------------------
<PAGE>
EXHIBIT 5
<PAGE>
June 23, 1998
CEL-SCI Corporation
8229 Boone Blvd., Suite 802
Vienna, Virginia 22182
Gentlemen:
This letter will constitute an opinion upon the legality of the
sale by CEL-SCI Corporation, a Colorado corporation, of up to
1,600,000 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
<PAGE>
EXHIBIT 23
<PAGE>
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 December 8, l997, appearing
in the Annual Report on Form l0-K of CEL-SCI Corporation for the year ended
September 30, l997.
DELOITTE & TOUCHE LLP
Washington, D.C.
June 17, l998
<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 1,600,000 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
June 23, 1998
<PAGE>
EXHIBIT 99
<PAGE>
- EXHIBIT B -
CEL-SCI Corporation
8229 Boone Blvd., Suite 802
Vienna, Virginia 22182
Gentlemen:
I represent and agree that said Bonus Shares are being acquired
by me for investment and that I have no present intention to transfer,
sell or otherwise dispose of such shares, except as permitted pursuant
to the Plan and in compliance with applicable securities laws, and
agree further that said shares are being acquired by me in accordance
with and subject to the terms, provisions and conditions of said Plan,
to all of which I hereby expressly assent. These agreements shall bind
and inure to the benefit of my heirs, legal representatives,
successors and assigns.
My address of record is:
and my social security number: .
Very truly yours,
Receipt of the above is hereby acknowledged.
CEL-SCI CORPORATION
------- By-----------------------
Date its---------------------
<PAGE>
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 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 Stock Bonus Plans. 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 --- , 1998.
<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 obtained 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
8229 Boone Blvd.
Suite 802
Vienna, Virginia 223l4
(703) 506-9460
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 for the fiscal year ended
September 30, 1997; and
(2) The Company's report on Form 10-Q for the quarter ended December
31, 1997.
(3) The Company's report on Form 10-Q for the quarter ended March 31,
1998.
(4) Proxy Statement relating to the May 29, 1998 Annual Meeting of
Shareholders.
<PAGE>
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 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
RISK FACTORS ..................................................... 7
DILUTION AND COMPARATIVE SHARE DATA ......................... 10
USE OF PROCEEDS................................................... 14
SELLING SHAREHOLDERS.............................................. 14
PLAN OF DISTRIBUTION............................................. 17
DESCRIPTION OF COMMON STOCK...................................... 18
GENERAL .......................................................... 18
<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 cancer patients. The Company's
second product, HGP-30, is being tested to determine if it is an effective
treatment/vaccine against the AIDS virus. In 1996, the Company acquired a new
patented T-cell Modulation Process which uses "heteroconjugates" to direct the
body to choose 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 potential treatments and/or vaccines against various
diseases. Present target diseases are AIDS, herpes simplex, malaria,
tuberculosis, prostate cancer and breast cancer.
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 indications 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 twenty 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 start of two human clinical
studies using MULTIKINE and focusing on prostate and head and neck cancer. The
prostate study was conducted at Jefferson Hospital in Philadelphia, Pennsylvania
and involved prostate cancer patients who had failed on hormonal therapy. Five
patients completed the treatment and the data from this study demonstrated the
safety and feasibility of using MULTIKINE in the treatment of prostate cancer.
Biopsies from the patients in the study also suggest the recruitment of
inflammatory cells to the tumor site. Based on these findings, investigators are
currently preparing a new protocol for evaluation by the FDA to study the
ability of MULTIKINE to treat patients with prostate cancer. The study is
expected to test MULTIKINE as a therapy to be used prior to surgical removal of
the prostate gland. The head and neck cancer study will involve up twenty
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.
<PAGE>
In January l997 the FDA authorized a clinical trial using MULTIKINE to
determine its safety in the potential treatment of HIV infected individuals and
to determine its effect on various immune system responses.
In April 1997, pursuant to authorization from Israeli health
authorities, a clinical trial was begun using MULTIKINE to treat head and neck
cancer patients. In September l997 the Company started a similar clinical trial
in Canada. The Canadian study will involve up to 21 patients who are scheduled
for surgery or radiation.
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, 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
receiving the two lowest dosage levels were asked to donate blood for a SCID
mouse HIV challenge study. The SCID mouse is considered by many scientists 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.
In September 1997 VTI completed a Phase I safety study of the HGP-30
AIDS vaccine in 24 HIV infected patients. The study showed that immunizations
with the HGP-30 vaccine coupled with KLH were safe in AIDS patients.
In June 1998 approval was received to begin clinical trials of the HGP-30
vaccine in the Netherlands. The upcoming study using VTI's vaccine will be the
only Phase II AIDS vaccine study ongoing in Europe and will focus on the
vaccine's ability to generate immune responses against the viral subtypes most
common around the globe. In the upcoming trial, 30 healthy, HIV-negative
volunteers will be studied at the Institute for Clinical Pharmacology, Pharna
Bio Research, in the Netherlands and will receive one of three different dosages
of the vaccine. The results from this Phase II trial are expected to produce
critical dose response information which will be useful for future trials.
<PAGE>
The Company's main focus is now to determine the ability of the HGP-30
vaccine to prevent, as opposed to only treat, AIDS.
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 $38,695,000 at September 30, 1997, and
expects to incur substantial losses for the foreseeable future.
The Company's executive offices are located at 8229 Boone Blvd., Suite
802, Vienna, Virginia 22314, and its telephone number is (703) 549-5293.
As of May 15, 1998 the Company had 11,515,736 shares of Common Stock
issued and outstanding.
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 March 31, 1998, the Company has incurred net losses of approximately
$(41,526,000). 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 necessary
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.
<PAGE>
Viral Technologies, Inc. ("VTI"), a wholly-owned subsidiary 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 2000, of
MULTIKINE for research and testing purposes. At present, this is the Company's
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 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. Certain aspects of the Company's technologies are covered by
U.S. and foreign patents. In addition, the Company has a number of patent
applications pending. 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.
<PAGE>
Disputes may arise between the owners of the patents or 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 or the owners of the patents will be in a position,
or will deem it advisable, to carry on such a defense. Other private and public
concerns, including universities, 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
or the owners of the patents 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 MULTIKINE patent will expire in the year
2000. 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.
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.
Options, Warrants and Convertible Securities. The Company has issued
options, warrants and other convertible securities ("Derivative Securities")
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
<PAGE>
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
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 significant
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 May 15, 1998, the Company had 11,515,736 shares of its Common
Stock outstanding with a net tangible book value (total assets less total
liabilities and intangible assets) of approximately $1.40 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.
<PAGE>
"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.
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. By means of a separate
registration statement filed with the Securities and Exchange Commission the
shares of common stock referenced in notes A through F are being offered for
public sale. The shares of common stock issuable upon the exercise of options
which are held by the Company's officers and directors, and which are referenced
in Note G, are being offered for sale by means of this prospectus. See "Selling
Shareholders".
Number of Note
Shares Reference
Outstanding as of May 15, 1998 11,515,736
Shares to be issued upon conversion of
Series D Preferred Stock, assuming
conversion price of $8.28 per share 1,207,730 A
Shares issuable upon exercise of
Series A and Series B Warrants 1,100,000 A
Shares issuable upon exercise of
Sales Agent Warrants 50,000 B
Shares granted to public relations
consultant and shares issuable
upon exercise of options
granted to financial consultants 204,000 C
Shares issuable upon exercise of
Class A and Class B Warrants 233,188 D
Shares issuable upon exercise of warrants
held by former holders of the
Company's Series B Preferred Stock. 82,250 E
Shares issuable upon exercise of
warrants sold in Company's 1992
Public Offering/1998 Exchange Offer 1,035,000 F
<PAGE>
Shares issuable upon exercise of options
and warrants granted to Company's
officers, directors, employees, consultants,
and third parties 2,492,346 G
A. In December 1997, the Company sold 10,000 shares of its Series D
Preferred Stock, 550,000 Series A Warrants and 550,000 Series B
Warrants, to ten institutional investors for $10,000,000. The
Series D Preferred Shares may be converted into shares of the
Company's Common Stock. Prior to September 19, 1998 (or such
earlier date as the market price of the Company's Common Stock is
$3.45 or less for five consecutive trading days) the number of
shares issuable upon the conversion of each Series D Preferred Share
is to be determined by dividing $1,000 by $8.28. On or after
September 19, 1998 the number of shares issuable upon the conversion
of each Series D Preferred Share is to be determined by dividing
$1,000 by the lower of (i) $8.28, or (ii) the average price of the
Company's common stock for any two trading days during the ten
trading days preceding the conversion date. Each Series A Warrant
allows the holder to purchase one share of the Company's common
stock for $8.62 at any time prior to December 22, 2001. Each Series
B Warrant allows the holder to purchase one share of the Company's
Common Stock for $9.31 at any time prior to December 22, 2001.
B. In connection with the Company's December l997 sale of Series D
Preferred Shares and Warrants Shoreline Pacific Institutional Finance,
the Sales Agent for such offering, received a commission plus warrants
to purchase 50,000 shares of the Company's Common Stock (the "Sales
Agent Warrants"). The Sales Agent Warrants are exercisable at a price
of $8.62 per share at any time prior to December 22, 2001.
C. The Company has agreed to issue 9,000 shares of common stock to a
public relations consultant and options for the purchase of an
additional 195,000 shares of common stock to certain financial
consultants in consideration for services provided to the Company. The
options are exercisable at prices ranging between $5.00 and $7.31 per
share and expire between October 1998 and September 2002.
D. In December 1996 the Company raised $2,850,000 from the sale of
units consisting of 2,850 shares of the Company's Series C Preferred
Stock, 379,763 Class A Warrants and 379,763 Class B Warrants. The
Series C Preferred Shares were 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" was
<PAGE>
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 could not be more than $4.00. Each Class A
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, 1998. Each Class 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. As of April 30, 1998
all shares of the Series C Preferred Stock had been converted into
9l5,27l shares of the Company's Common Stock, 273,163 Series A
Warrants had been exercised and 253,175 Series B Warrants had been
exercised.
E. 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 85% of the Closing Price of the Company's Common Stock.
All Preferred Shares were 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" was 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 could not be less than $3.60 nor more than $14.75. The
Preferred Shares were entitled to a quarterly dividend of $17.50 per
share. 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. In May 1997 all remaining 250 shares of
the Series B Preferred Stock were converted into 69,444 shares of
common stock. As of April 30, l998 Warrants for the purchase of
17,500 shares of common stock had been exercised.
F. In connection with the Company's February 1992 public offering, the
Company issued 5,175,000 warrants. Every five warrants allows the
warrant holder to purchase one share of the Company's common stock
for $6.00 per share at any time prior to August 1, 1998. Between
January 9, 1998 and February 17, 1998 the holders of the Company's
outstanding warrants were given the opportunity to purchase one
share of the Company's Common Stock and one Series A Warrant in
exchange for five warrants and $6.00 (the "Exchange Offer"). Each
Series A Warrant allows the holder to purchase one additional share
of the Company's Common Stock for $l0.00 at any time prior to
February 7, 2000. During the period of the Exchange Offer, 582,025
warrants were tendered, the Company received proceeds of
approximately $698,000 and a total of 116,405 Series A Warrants were
issued to the warrant holders participating in the Exchange Offer.
<PAGE>
G. The options are exercisable at prices ranging from $2.38 to $14.10 per
share. The Company may also grant options to purchase additional shares
under its Incentive Stock Option and Non-Qualified Stock Option Plans.
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 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 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 Incentive Stock Option
Plans which collectively authorize the issuance of up to 1,100,000 shares of the
Company's Common Stock to persons that exercise options granted pursuant to the
Plan. Only Company employees may be granted options pursuant to the Incentive
Stock Option Plan.
Non-Qualified Stock Option Plans. The Company has Non-Qualified Stock
Option Plans which collectively authorize the issuance of up to 2,760,000 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.
<PAGE>
Stock Bonus Plans. The Company has Stock Bonus Plans which collectively
allow for the issuance of up to 140,000 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.
Summary. The following sets forth certain information, as of April 30,
1998, concerning the stock options and stock bonuses granted by the Company.
Each option represents the right to purchase one share of the Company's Common
Stock.
Total Shares Shares Reserved Shares issued Remaining
Reserved for Outstanding as Stock Options/Shares
Name of Plan Under Plan Options Bonus Under Plans
- ------------- ----------- ---------------- ----------- ---------------
Incentive Stock
Option Plans 1,100,000 585,216 N/A 496,617
Non-Qualified
Stock Option Plans 2,760,000 1,528,267 N/A 894,524
Stock Bonus Plans 140,000 N/A 5,754 134,246
TOTAL:
The following table summarizes the options granted to the Company's
officers, directors, employees and consultants pursuant to the Plans as of April
30, 1998. Certain options were granted in accordance with the Company's Salary
Reduction Plan. Pursuant to the Salary Reduction Plan, any employee of the
Company was allowed to receive options (exercisable at market price at time of
grant) in exchange for a reduction in such employee's salary.
Name of
Option Holder Shares Subject to Options (1)
------------- -----------------------------
Maximilian de Clara 426,333
Geert R. Kersten 811,750
Patricia B. Prichep 118,000
M. Douglas Winship 67,000
Eyal Talor, Ph.D 73,500
Prem Sarin, Ph.D 68,500
Daniel Zimmerman, Ph.D 61,000
Mark Soresi 105,000
F. Donald Hudson 137,000
Employees and Consultants 245,400
-------
to Company 2,113,483
<PAGE>
(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 $14.10 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 Beneficially Bonus Option pletion of the of
Shareholder Owned Shares(2) Shares(3) Offering Class
- ---------------- ----------- --------- --------- -------------- --------
Maximilian de Clara -- -- 426,333 -- --
Geert R. Kersten 105,495 (1) 555 811,750 104,940 *
Patricia B. Prichep 3,348 318 118,000 3,030 *
M. Douglas Winship 438 438 67,000 -- --
Eyal Talor, Ph.D 1,909 1,909 73,500 -- --
Prem Sarin, Ph.D 376 376 68,500 -- --
Daniel Zimmerman, Ph.D 20,431 361 61,000 20,700 *
Mark V. Soresi 15,000 -- 105,000 15,000 *
F. Donald Hudson -- 137,000 -- --
* Less than 1%.
(1) Includes shares held in trusts for the benefit of Mr. Kersten's children.
(2) Represents shares issued as stock bonus. Of these, all but 1,500 shares were
issued, in lieu of cash, as the Company's matching contribution to its 401(k)
pension plan. (3) Represents shares issued or issuable upon exercise of stock
options.
Mr. de Clara and Mr. Kersten are officers and directors of the
Company. Ms. Prichep, Mr. Winship, Dr. Talor, Dr. Sarin and Dr. Zimmerman
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.
<PAGE>
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 ss.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 102 under the Securities Exchange Act of 1934 ("1934 Act") until
their participation in that distribution is completed. A "distribution" is
defined in Rule 102 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 101 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.
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.
<PAGE>
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 personal
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 authorized
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 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.
