As filed with the Securities and Exchange Commission on March ___, 2000
Registration No. 333-_____
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 of (I.R.S. Employer
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 issuable 500,000 $7.25 $ 3,625,000 $ 957.00
pursuant to Year 2000
Incentive Stock Option Plan
Common stock issuable 500,000 $7.25 $ 3,625,000 $ 957.00
pursuant to Year 2000
Non-Qualified Stock Option
Plan
Common Stock issuable 300,000 $7.25 $ 2,175,000 $ 574.20
pursuant to Stock Bonus Plan
Common Stock issuable 200,000 $7.25 $ 1,450,000 $ 382.80
pursuant to Year 2000 Stock
Bonus Plan ________ __________ _______
1,500,000 $10,875,000 $2,871.00
========= =========== =========
- ------------------------------------------------------------------------------
(1) This Registration Statement also covers such additional number of shares,
presently undeterminable, as may become issuable under the Stock Bonus Plans in
the event of stock dividends, stock splits, recapitalizations or other changes
in the Company's common stock. The shares subject to this Registration Statement
are 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
closing price of the Company's common stock on March 1, 2000.
<PAGE>
CEL-SCI CORPORATION
Cross Reference Sheet Required Pursuant to Rule 404
PART I
INFORMATION REQUIRED IN PROSPECTUS
(NOTE: Pursuant to instructions to Form S-8,
the Prospectus described below is not filed with this Registration Statement.)
Item
No. Form S-8 Caption Caption in Prospectus
1. Plan Information
(a) General Plan Information Stock Option and Bonus Plans
(b) Securities to be Offered Stock Option and Bonus Plans
(c) Employees who may Participate Stock Option and Bonus Plans
in the Plan
(d) Purchase of Securities Pursuant Stock Option and Bonus Plans
to the Plan and Payment for
Securities Offered
(e) Resale Restrictions Resale of Shares by Affiliates
(f) Tax Effects of Plan Stock Option and Bonus Plans
Participation
(g) Investment of Funds Not Applicable.
(h) Withdrawal from the Plan; Other Information Regarding the Plans
Assignment of Interest
(i) Forfeitures and Penalties Other Information Regarding the Plans
(j) Charges and Deductions and Other Information Regarding the Plans
Liens Therefore
2. Registrant Information and Employee Available Information,
Plan Annual 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, 1999, report on Form 10-Q
for the quarter ending December 31, 1999, and Proxy Statement relating to the
Company's March 17, 2000 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 for Registration Claimed
In January 2000 the Company issued 200,000 shares of its common stock to
Maximilian de Clara in consideration of past services rendered to the Company.
The issuance of these shares was exempt pursuant to Section 4 (2) of the
<PAGE>
Securities Act of 1933. The 200,000 shares were issued pursuant to the Company's
Stock Bonus Plan. Mr. de Clara, as an officer and director of the Company, had
access to all material information concerning the Company at the time the shares
were issued. No underwriter was used and no person was paid a commission in
connection with the sale of these shares.
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) - Year 2000 Incentive Stock
Option Plan __________________________________
(c) - Year 2000 Non-Qualified
Stock Option Plan __________________________________
(d) - Stock Bonus Plan (as amended) __________________________________
(e) - Year 2000 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;
<PAGE>
(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 Vienna, State of Virginia, on February 29, 2000.
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 February 29, 2000
Maxamilian de Clara
/s/ Geert R. Kersten Director, Principal February 29, 2000
- -------------------------
Geert R. Kersten Financial Officer and
Chief Executive Officer
Alexander G. Esterhazy Director
/s/ John M. Jacquemin Director February 29, 2000
- -------------------------
John M. Jacquemin
<PAGE>
FORM S-8CEL-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) - Year 2000 Incentive Stock
Option Plan _________________________________
(c) - Year 2000 Non-Qualified
Stock Option Plan _________________________________
(d) - Stock Bonus Plan (as amended) _________________________________
(e) - Year 2000 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) __________________________________
CEL-SCI CORPORATION
YEAR 2000 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Year 2000 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.
<PAGE>
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 500,000. 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 100% 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 10% of the total
combined voting power of all classes of stock of the Company, the purchase price
of the option shall not be less than 110% of the fair market value of the stock
at the time of the granting of the option.
(b) Period of Option. The maximum period for exercising an option
shall be 10 years from the date upon which the option is granted, provided,
however, if the optionee, at the time the option is granted, owns stock
possessing more than l0% of the total combined voting power of all classes of
stock of the Company, the maximum period for exercising an option shall be five
years from the date upon which the option is granted and provided further,
however, that these periods may be shortened in accordance with the provisions
of Paragraph 7 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.
If an optionee shall cease to be employed by the Company due to
disability, as defined in Section 22(e)(3) of the Code, he may, but only within
the one year next succeeding such cessation of employment, exercise his option
<PAGE>
to the extent that he was entitled to exercise it on the date of such cessation.
The Plan will not confer upon any optionee any right with respect to continuance
of employment by the Company, nor will it interfere in any way with his right,
or his employer's right, to terminate his employment at any time.
(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 descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
(f) Death of Optionee. In the event of the death of an 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.
<PAGE>
8. Certain Dispositions of Shares. Any options granted pursuant to this
Plan shall be conditioned such that if, within the earlier of (i) the two-year
period beginning on the date of grant of an option or (ii) the one-year period
beginning on the date after which any share of stock is transferred to an
individual pursuant to his exercise of an option, such an 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
<PAGE>
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) make any material change
in the class of eligible employees as defined in Section 5, (b) extend the term
of the Plan or the maximum option periods provided in paragraph 6, (c) decrease
the minimum option price provided in paragraph 6, except as provided in
paragraph 9, or (d) 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 any person receiving options
pursuant to this Plan 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 the date of the act or
omission in respect of which such right of action arises.
14. Governing Law. The Plan shall be governed by the laws of the State
of Colorado.
l5. 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
YEAR 2000 NON-QUALIFIED STOCK OPTION PLAN
l. Purpose. This Year 2000 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 1954, 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 500,000. The shares of Common Stock to
<PAGE>
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 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.
<PAGE>
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.
<PAGE>
l0. Amendment, Suspension, and Termination of Plan. The Board of Directors
may alter, suspend, or discontinue the Plan at any time.
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 any person receiving options
pursuant to this Plan 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 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.
13. 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
STOCK BONUS PLAN
(as amended)
l. Purpose. The purpose of this Stock Bonus 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 or by the Board of
Directors (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 640,000 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,
<PAGE>
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
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
non-assessable 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 (or the Company's subsidiaries)
employees, directors and officers, and consultants or advisors to the Company
(or its subsidiaries), 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
<PAGE>
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.
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
<PAGE>
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.
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. The person entitled to receive Bonus Shares
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 any person receiving shares of common
stock pursuant to this Plan 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 the date of the act or
omission in respect of which such right of action arises.
10. Amendment, Suspension or Termination of the Plan. The Board of
Directors may alter, suspend, or discontinue the Plan at any time.
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.
11. Governing Law. The Plan shall be governed by the laws of the State
of Colorado.
12. Expenses of Administration. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the Company.
<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. #802
Vienna, VA 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
CEL-SCI CORPORATION
YEAR 2000 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. "Company" means CEL-SCI Corporation and any subsidiary of CEL-SCI
Corporation
C. "Committee" means the directors duly appointed to administer the Plan.
D. "Plan" shall mean this Stock Bonus Plan.
E. "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.
F. "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 200,000 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
<PAGE>
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
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.
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.
<PAGE>
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.
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
<PAGE>
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.
l0. Amendment, Suspension or Termination of the Plan. The Board of Directors
may alter, suspend, or discontinue the Plan at any time.
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.
<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
February 29, 2000
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 1,500,000 shares of Common
Stock, all as referred to in the Registration Statement on Form S-8 filed by the
Company with the Securities and Exchange Commission.
We have examined the Articles of Incorporation, the Bylaws and the
minutes of the Board of Directors of the Company and the applicable laws of the
State of Colorado, and a copy of the Registration Statement. In our opinion, the
Company has duly authorized the issuance of the shares of stock mentioned above
and such shares when issued will be legally issued, fully paid, and
nonassessable.
Very truly yours,
HART & TRINEN
By /s/ William T. Hart
William T. Hart
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
CEL-SCI CORPORATION on Form S-8 of our report dated December 6, 1999, appearing
in the Annual Report on Form 10-K of CEL-SCI CORPORATION for the year ended
September 30, 1999.
DELOITTE & TOUCHE LLP
Mclean, Virginia
February 29, 2000
<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 1,500,000 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, L.L.P.
By /s/ William T. Hart
William T. Hart
Denver, Colorado
February 29, 2000
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 __________, 2000.
<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, 1999; and
(2) The Company's report on Form 10-Q for the quarter ended December
31, 1999.
(3) Proxy Statement relating to the March 17, 2000 Meeting of Shareholders.
All documents filed with the Commission by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering registered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
<PAGE>
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 ........................................................... 6
COMPARATIVE SHARE DATA ................................................. 9
USE OF PROCEEDS ........................................................ 11
SELLING SHAREHOLDERS ................................................... 11
PLAN OF DISTRIBUTION ................................................... 14
DESCRIPTION OF COMMON STOCK ............................................ 14
GENERAL ................................................................. 15
<PAGE>
THE COMPANY
The Company was formed as a Colorado corporation in 1983 and is
involved in the research and development of certain drugs and vaccines. The
Company's first product, Multikine(TM), 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 by the Company's wholly-owned subsidiary, Viral Technologies, Inc.
to determine if it is an effective vaccine/treatment against the AIDS virus. The
third technology the Company is developing, L.E.A.P.S. (Ligand Epitope Antigen
Presentation System) is a T-cell modulation technology which can be used to
direct a specific immune response and which is thought to be particularly
important in the case of diseases which have no approved vaccinations such as
herpes simplex, malaria, and AIDS. 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, pre-clinical 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 safety 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 within an
expanded group of patients at geographically dispersed test sites.
The costs associated with the clinical trials relating to the Company's
technologies, research expenditures and the Company's administrative expenses
have been funded with the public and private sales of shares of the Company's
Common Stock and borrowings from third parties, including affiliates of the
Company.
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 $(54,332,000) at December 31, 1999, and
expects to incur substantial losses for the foreseeable future.
The Company's executive offices are located at 8229 Boone Blvd., #802,
Vienna, Virginia 22182, and its telephone number is (703) 506-9460.
As of February 24, 2000 the Company had 18,977,351 shares of Common Stock
issued and outstanding.
<PAGE>
RISK FACTORS
Investors should be aware that this offering involves certain risks,
including those described below, which could adversely affect the value of their
holdings of Common Stock. The Company does not make, nor has it authorized any
other person to make, any representation about the future market value of the
Company's Common Stock. In addition to the other information contained in this
Prospectus, the following factors should be considered carefully in evaluating
an investment in the shares offered by this Prospectus
The Company Has Earned Only Limited Revenues and Has a History of Losses.
The Company has had only limited revenues since it was formed in 1983.
Since the date of its formation and through December 31, 1999 the Company
incurred net losses of approximately $(54,332,000). During the quarter ended
December 31, 1999 the Company suffered a loss of $(1,704,408). 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.
There can be no assurance the Company will be profitable. At the
present time, the Company intends to use available funds to finance the
Company's operations. Accordingly, while payment of dividends 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 common stock
dividends will ever be paid.
The Company Needs Additional Capital to Finance Its Operations.
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 and may require several years to complete. The Company expects that it
will need additional financing over an extended period of time 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.
Cost Estimates for Clinical Trials and Research May be Inaccurate.
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
<PAGE>
additional funding for its research efforts. Products Which May Be Developed by
the Company Will Require Regulatory Approvals Prior to Sale.
Therapeutic agents, drugs 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, VTI 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 Company is Dependent on an Unrelated Corporation to Manufacture Multikine
The Company has an agreement with an unrelated corporation for the
production, until August 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.
The Biomedical Field in Which the Company is Involved is Undergoing Rapid and
Significant Technological Change.
The successful development of therapeutic agents and diagnostic
products from the Company's compounds, compositions and processes, 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.
The Company's Patents Might Not Protect the Company's Technologies.
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 Company. Disputes may arise between the Company and
others as to the scope and validity of these or other patents. Any defense of
the patents could prove costly and time consuming and there can be no assurance
that the Company will be in a position, or will deem it advisable, to carry on
such a defense. Other private and public concerns, including 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
<PAGE>
patents, if any, the extent to which the Company may wish or need to acquire the
rights to such patents, and the cost and availability of such rights are
presently unknown. Also, as far as the Company relies upon unpatented
proprietary technology, there is no assurance that others may not acquire or
independently develop the same or similar technology. The Company's first
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 trade secrets and
later issued patents will protect the technology associated with Multikine past
the year 2000.
The Company's Product Liability Insurance May Not Be Adequate.
Although the Company has product liability insurance for Multikine and
its HGP-30 vaccine, 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.
The Loss of Management and Scientific Personnel Could Adversely Affect the
Company.
The Company is dependent for its success on the continued availability
of its executive officers. The loss of the services of any of the Company's
executive officers could have an adverse effect on the Company's business. The
Company does not carry key man life insurance on any of its officers. The
Company's future success will also depend upon its ability to attract and retain
qualified scientific personnel. There can be no assurance that the Company will
be able to hire and retain such necessary personnel.
Shares Issuable Upon the Conversion of Options, Warrants and Convertible
Securities May Depress the Price of the Company's Common Stock.
The Company has issued options to its officers, directors, employees
and consultants 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 issuable upon the exercise of the options will
be available for public sale. Such filings could result in substantial expense
to the Company and could hinder future financings by the Company.
Until the options expire, the holders 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 the options may exercise
them at a time when the Company could obtain additional capital on terms more
favorable than those provided by the options. The exercise of the options will
dilute the voting interest of the owners of presently outstanding shares of the
Company's Common Stock and may adversely affect the ability of the Company to
obtain additional capital in the future. The sale of the shares of Common Stock
issuable upon the exercise of the options could adversely affect the market
price of the Company's stock.
<PAGE>
In connection with the sale of the Company's Series D Preferred Stock,
the Company issued Series A and Series B Warrants which collectively allow for
the purchase of 1,100,000 shares of the Company's common stock.
In December 1999 and January 2000, the Company sold 1,148,592 shares of
its common stock, plus Series A and Series B warrants, to three private
investors. The Series A warrants permit the holders of the warrants to purchase
402,007 shares of the Company's common stock at a price of $2.925 per share at
any time prior to December 8, 2002. The Series B warrants allow the investors,
under certain circumstances, to acquire additional shares of the Company's
common stock at a nominal price in the event (i) the price of the Company's
common stock falls below $2.4375 per share or (ii) the Company raises in excess
of $1,000,000 at a price which is below either the then prevailing market price
of the Company's common stock or $2.4375 per share. Since the price of the
Company's common stock has been volatile in the past, investors could experience
substantial dilution upon the exercise of the Series B warrants if there is a
decline in the market price of the Company 's common stock.
The issuance of common stock upon the exercise of the Company's
outstanding options and warrants, as well as future sales of such common stock
or of shares of common stock held by existing stockholders, or the perception
that such sales could occur, could adversely affect the market price of the
Company's common stock. See "Comparative Share Data".
Competition in the Research, Development and Commercialization of Products Which
May be Used in the Prevention or Treatment of Cancer and AIDS is Intense.
Most pharmaceutical and biotechnology companies 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.
The Market Price for the Company's Common Stock is Volatile.
The market price of the Company's common stock, as well as the
securities of other biopharmaceutical and biotechnology companies, have
historically been highly volatile, and the market has from time to time
experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. Factors such as fluctuations in
the Company's operating results, announcements of technological innovations or
new therapeutic products by the Company or its competitors, governmental
regulation, developments in patent or other proprietary rights, public concern
as to the safety of products developed by the Company or other biotechnology and
pharmaceutical companies, and general market conditions may have a significant
effect on the market price of the Company's Common Stock.
<PAGE>
COMPARATIVE SHARE DATA
As of February 24, 2000, the Company had 18,977,351 shares of its
common stock outstanding.
The following table reflects shares of common stock 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 separate
registration statements filed with the Securities and Exchange Commission, the
shares of common stock referenced in Notes A through E 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 F, are being offered for sale by means of this prospectus. See "Selling
Shareholders".
Number of Note
Shares Reference
Shares outstanding as of February 24, 2000(1) 18,977,351
Shares issuable upon exercise of 402,007 A
Series A warrants
Shares issuable upon exercise of -- A
Series B warrants
Shares issuable upon exercise of 50,000 B
sales agent warrants (1997 offering)
Shares issuable upon exercise of sales agent 25,000 C
warrants (1999 offering)
Shares issuable upon exercise of warrants 1,100,000 D
sold to investors in December 1997 private
offering
Shares issuable upon exercise of options 135,000 E
granted to investor relations consultants
Shares issuable upon exercise of options and 3,153,448 F
warrants granted to the Company's officers,
directors, employees, consultants, and third
parties
A. In December 1999 and January 2000, the Company sold 1,148,592 shares of its
common stock, plus Series A and Series B warrants, to a group of private
investors for $2,800,000. The Series A warrants allow the holders to
purchase up to 402,007 shares of the Company's common stock at a price of
$2.925 per share at any time prior to December 8, 2002. The Series B
warrants allow the holders, under certain circumstances, to acquire
<PAGE>
additional shares of the Company's common stock at a nominal price in the
event (i) the price of the Company's common stock falls below $2.4375 per
share prior to certain vesting dates, or (ii) the Company raises in excess
of $1,000,000 at a price which is below either the then prevailing market
price of the Company's common stock or $2.4375 per share.
The fixed vesting dates for the purposes of the Series B warrants are:
December 8, 2000
June 8, 2001
December 8, 2001
June 8, 2002
December 8, 2002
Other vesting dates will occur when an extraordinary event occurs, such as a
change in the control of the Company, the bankruptcy or liquidation of the
Company, or the failure of the Company's common stock to be listed on the
American Stock Exchange, the NASDAQ Stock Market or the NASDAQ SmallCap
market.
Upon the occurrence of a vesting date, the additional shares (if any)
which the Company will be required to issue to the holders of the Series B
warrants will be determined in accordance with the following formula:
[(C x PA) / A] - C
C = The number of shares purchased by the Series B warrant holder and
not yet sold
PA = The Adjustment Price from the immediately preceding
vesting date or, with respect to the first vesting date,
$2.4375.
A = Adjustment price, which is equal to the lesser of
$2.4375, or the average of the 10 lowest closing bid
prices of the Company's common stock during the 30
trading days immediately preceding the vesting date.
In addition to the foregoing, if the Company raises in excess of $1,000,000
through the sale of common stock, or securities convertible into common stock,
at a price which is below either the then prevailing market price of the
Company's common stock or $2.4375 per share, then the holders of the Series B
warrants will be entitled to receive additional shares of the Company's common
stock in accordance with the following formula:
[(C x $2.4375) / D] - C
C = The number of shares purchased by the Series B warrant
holder and not yet sold on the date of the financing.
<PAGE>
D = An amount equal to the lesser of the average of the
closing bid prices of the Company's common stock for the
10 trading days immediately preceding the date of the
financing, or the price per share of the common stock,
or common stock equivalent (as the case may be), sold in
the financing.
The actual number of shares issuable upon the exercise of the Series B
warrants (if any) will vary depending upon a number of factors, including the
price of the Company's common stock at certain dates. Accordingly, the number of
shares (if any) which may be issued upon the exercise of the Series B warrants
cannot be determined at this time. However, based upon the market price of the
Company's common stock on February 18, 2000, the Company would not be required
to issue any material shares of its common stock if the Series B warrants were
exercised as of that date.
B. In connection with the Company's December 1997 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 are
exercisable at a price of $8.62 per share at any time prior to December 22,
2001.
C. In connection with the Company's December 1999 sale of common stock and
warrants, Reedland Capital Partners, a division of Financial West Group,
acted as the sales agent for such offering and received a commission of
$125,000 plus Series A warrants to purchase 25,000 shares of the Company's
common stock. The sales agent warrants are exercisable at a price of $2.925
per share at any time prior to December 8, 2002.
D. In December 1997, the Company sold 10,000 shares of its Series D Preferred
Stock, and 1,100,000 warrants, to ten institutional investors for
$10,000,000. All Series D Preferred shares were subsequently converted into
5,201,400 shares of the Company 's common stock. Warrants for the purchase
of 550,000 shares of common stock are exercisable at a price of $8.62 at
any time prior to December 22, 2001. Warrants for the purchase of 550,000
shares of common stock are exercisable at a price of $9.31 at any time
prior to December 22, 2001. As of December 31, 1999 none of the warrants
had been exercised.
E. The Company has granted options for the purchase of 135,000 shares of common
stock to certain investor relations consultants in consideration for
services provided to the Company. The options are exercisable at prices
ranging between $2.50 and $5.00 per share and expire between June 2000 and
February 2004.
F. The options are exercisable at prices ranging from $2.38 to $11.00 per
share. The Company may also grant options to purchase additional shares
under its Incentive Stock Option and Non-Qualified Stock Option Plans.
<PAGE>
USE OF PROCEEDS
All of the shares offered by this Prospectus are being offered by
certain owners of the Company's Common Stock (the Selling Shareholders) and were
issued by the Company in connection with the Company's employee stock bonus or
stock option plans. None of the proceeds from this offering will be received by
the Company. Expenses expected to be incurred by the Company in connection with
this offering are estimated to be approximately $10,000. The Selling
Shareholders have agreed to pay all commissions and other compensation to any
securities broker/dealers through whom they sell any of the Shares.
SELLING SHAREHOLDERS
The Company has issued (or may in the future issue) shares of its
common stock to various persons pursuant to certain employee incentive plans
adopted by the Company. The employee incentive plans provide for the grant, to
selected employees of the Company and other persons, of either stock 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". The total shares
reserved under each Plan includes shares authorized by the year 2000 Plans which
are being submitted to the Company's shareholders for their approval at the
Company's March 17, 2000 Annual Meeting of Shareholders.
Incentive Stock Option Plans. The Company has Incentive Stock Option
Plans which collectively authorize the issuance of up to 1,600,000 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 3,260,000 shares
of the Company's Common Stock to persons that exercise options granted pursuant
to the Plans. The Company's employees, directors, officers, consultants and
advisors are eligible to be granted options pursuant to the Plans, provided
however that bona fide services must be rendered by such consultants or advisors
and such services must not be in connection with the offer or sale of securities
in a capital-raising transaction. The option exercise price is determined by the
Committee but cannot be less than the market price of the Company's Common Stock
on the date the option is granted.
Stock Bonus Plans. The Company has Stock Bonus Plans which collectively
allow for the issuance of up to 840,000 shares of Common Stock. Such shares may
consist, in whole or in part, of authorized but unissued shares, or treasury
shares. Under the Stock Bonus Plan, the Company's employees, directors,
officers, consultants and advisors are eligible to receive a grant of the
Company's shares, provided however that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
<PAGE>
Summary. The following sets forth certain information, as of February
24, 2000, 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 for Shares Remaining
Reserved Outstanding Issued as Options/Shares
Name of Plan Under Plans Options Stock Bonus Under Plans
- ------------ ----------- ----------- ----------- ---------------
Incentive Stock
Option Plans 1,600,000 953,850 N/A 604,983
Non-Qualified Stock
Option Plans 3,260,000 2,042,046 N/A 510,160
Stock Bonus Plans 840,000 N/A 471,804 368,196
Of the shares issued pursuant to the Company's Stock Bonus Plans 70,303
shares have been issued as part of the Company's contribution to its 401(k) plan
and 400,000 shares have been issued to Maximilian de Clara, the Company's
President, for services rendered to the Company.
The following table summarizes the options granted to the Company's
officers, directors, employees and consultants pursuant to the Plans as of
February 24, 2000. 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 278,666
Geert R. Kersten 1,070,000
Patricia B. Prichep 216,500
M. Douglas Winship 94,500
Eyal Talor, Ph.D 130,500
Prem Sarin, Ph.D 149,500
Daniel Zimmerman, Ph.D 106,000
Michael Luecke 100,000
Alexander G. Esterhazy 20,000
John M. Jacquemin 20,000
Employees and consultants to Company 575,430
(1) The options issued to the Company's officers and directors are exercisable
at prices ranging from $1.94 to $5.62 per share. The other options issued
to certain employees of and consultants to the Company are exercisable at
prices ranging from $1.94 to $11.00 per share.
<PAGE>
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 Shares(3) Offering Class
Maximilian de Clara 200,000 200,000 -- -- --
Geert R. Kersten 148,598 (1) -- 1,070,000 148,598 *
Patricia B. Prichep 11,069 -- 216,500 11,069 *
M. Douglas Winship 6,860 -- 94,500 6,860 *
Eyal Talor, Ph.D 8,039 -- 130,500 8,039 *
Prem Sarin, Ph.D 5,836 -- 149,500 5,836 *
Daniel Zimmerman, Ph.D 25,381 -- 106,000 25,381 *
Michael Luecke 6,074 -- 100,000 6,074 *
Alexander G. Esterhazy -- 20,000 --
John M. Jacquemin 210,951 (2) 20,000 210,951
* Less than 1%.
(1) Includes shares held in trusts for the benefit of Mr. Kersten's children.
(2) Represents shares owned by Mooring Capital Fund, a company controlled by Mr.
Jacquemin.
(3) Represents shares issued or issuable upon exercise of stock options.
Mr. de Clara and Mr. Kersten are officers and directors of the Company. Mr.
Esterhazy and Mr. Jacquemin are directors of the Company. The other persons in
the foregoing tables are officers of the Company.
In September 1999 the Company issued Mr. de Clara 200,000 shares of the
Company's common stock in consideration for services rendered to the Company.
Mr. de Clara sold these 200,000 shares prior to February 10, 2000. The 200,000
shares shown in the foregoing table were issued in January 2000 and were also
issued in consideration of past services rendered to 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.
<PAGE>
DESCRIPTION OF COMMON STOCK
The shares of Common Stock offered by this Prospectus are fully paid
and non-assessable. Holders of the Common Stock do not have preemptive rights.
Each stockholder is entitled to one vote for each share of Common stock held of
record by such stockholder. There is no right to cumulate votes for election of
directors. Upon liquidation of the Company, the assets then legally available
for distribution to holders of the Common Stock will be distributed ratably
among such shareholders in proportion to their stock holdings. Holders of Common
Stock are entitled to dividends when, as and if declared by the Board of
Directors out of funds legally available therefor.
GENERAL
The Company's Bylaws provide that the Company will indemnify its
directors and officers against expense and liabilities they incur to defend,
settle or satisfy any civil or criminal action brought against them as a result
of their being or having been Company directors or officers unless, in any such
action, they have acted with gross negligence or willful misconduct. Officers
and Directors are not entitled to be indemnified for claims or losses resulting
from a breach of their duty of loyalty to the Company, for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law or a transaction from which the director derived an improper 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.
