SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
CEL-SCI CORPORATION
------------------------------------
(Name of Registrant as Specified In Its Charter)
William T. Hart - Attorney for Registrant
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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CEL-SCI CORPORATION
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22l82
(703) 506-9460
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 14, 2007
To the Shareholders:
Notice is hereby given that the annual meeting of the shareholders of
CEL-SCI Corporation ("CEL-SCI") will be held at Park Hyatt Zurich,
Beethoven-Strasse 21, 8002 Zurich, Switzerland on September 14, 2007, at 9:30
A.M., for the following purposes:
(1) to elect the directors who shall constitute CEL-SCI's Board of
Directors for the ensuing year;
(2) to approve the adoption of CEL-SCI's 2007 Incentive Stock Option Plan
which provides that up to 1,000,000 shares of common stock may be
issued upon the exercise of options granted pursuant to the Incentive
Stock Option Plan;
(3) to approve the adoption of CEL-SCI's 2007 Non-Qualified Stock Option
Plan which provides that up to 1,000,000 shares of common stock may be
issued upon the exercise of options granted pursuant to the
Non-Qualified Stock Option Plan;
(4) to approve the adoption of CEL-SCI's 2007 Stock Bonus Plan which
provides that up to 1,000,000 shares of common stock may be issued to
persons granted stock bonuses pursuant to the Stock Bonus Plan;
(5) to approve an amendment to CEL-SCI's Stock Compensation Plan to
provide for the issuance of up to 1,000,000 additional restricted
shares of common stock to CEL-SCI's directors, officers, employees and
consultants for services provided to the Company;
(6) to amend the Company's Articles of Incorporation such that the Company
would be authorized to issue 300,000,000 shares of common stock;
(7) to ratify the appointment of BDO Seidman, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September
30, 2007.
to transact such other business as may properly come before the meeting.
August 1, 2007 is the record date for the determination of shareholders
entitled to notice of and to vote at such meeting. Shareholders are entitled to
one vote for each share held. As of August 1, 2007, there were 114,248,590
issued and outstanding shares of CEL-SCI's common stock..
CEL-SCI CORPORATION
August 2, 2007 By: Geert R. Kersten
-------------------------------
Chief Executive Officer
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, AND
SIGN, DATE AND RETURN THE PROXY CARD, OR VOTE VIA THE INTERNET OR BY TELEPHONE
TO SAVE THE COST OF FURTHER SOLICITATION,
PLEASE VOTE PROMPTLY
CEL-SCI CORPORATION
8229 Boone Blvd.
Suite 802
Vienna, Virginia 22l82
(703) 506-9460
PROXY STATEMENT
The accompanying proxy is solicited by CEL-SCI's directors for voting at the
annual meeting of shareholders to be held on September 14, 2007, and at any and
all adjournments of such meeting. If the proxy is executed and returned, it will
be voted at the meeting in accordance with any instructions, and if no
specification is made, the proxy will be voted for the proposals set forth in
the accompanying notice of the annual meeting of shareholders. Shareholders who
execute proxies may revoke them at any time before they are voted, either by
writing to CEL-SCI at the address set forth above or in person at the time of
the meeting. Additionally, any later dated proxy will revoke a previous proxy
from the same shareholder. This proxy statement was mailed to shareholders of
record on or about August 2, 2007.
There is one class of capital stock outstanding. Provided a quorum
consisting of one-third of the shares entitled to vote is present at the
meeting, the affirmative vote of a majority of the shares of common stock voting
in person or represented by proxy is required to elect directors. Cumulative
voting in the election of directors is not permitted. The affirmative vote of
the holders of a majority of the outstanding shares of the Company's common
stock is required to approve the proposal to increase the Company's authorized
capitalization. The adoption of any other proposals to come before the meeting
will require the approval of a majority of votes cast at the meeting.
Shares of CEL-SCI's common stock represented by properly executed proxies
that reflect abstentions or "broker non-votes" will be counted as present for
purposes of determining the presence of a quorum at the annual meeting. "Broker
non-votes" represent shares held by brokerage firms in "street-name" with
respect to which the broker has not received instructions from the customer or
otherwise does not have discretionary voting authority. Abstentions and broker
non-votes will not be counted as having voted against the proposals to be
considered at the meeting.
PRINCIPAL SHAREHOLDERS
The following table lists, as of August 1, 2007, the shareholdings of (i)
each person owning beneficially 5% or more of CEL-SCI's common stock (ii) each
officer who received compensation in excess of $100,000 during CEL-SCI's most
recent fiscal year and (iii) all officers and directors as a group. Unless
otherwise indicated, each owner has sole voting and investment powers over his
shares of common stock.
1
Name and Address Number of Shares (1) Percent of Class (3)
---------------- ---------------- ----------------
Maximilian de Clara 694,674 0.6%
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland
Geert R. Kersten 6,417,949 (2) 5.4%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Patricia B. Prichep 1,732,992 1.5%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Eyal Talor, Ph.D. 1,110,173 1.0%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Daniel H. Zimmerman, Ph.D. 1,275,381 1.1%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
John Cipriano 224,886 0.2%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Alexander G. Esterhazy 254,999 0.2%
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland
C. Richard Kinsolving 484,090 0.4%
P.O. Box 20193
Bradenton, FL 34204-0193
Peter R. Young, Ph.D. 256,267 0.2%
1247 Dodgeton Drive
Frisco, TX 75034-1432
All Officers and Directors 12,451,411 10.2%
as a Group (9 persons)
(1) Includes shares issuable prior to November 30, 2007 upon the exercise of
options or warrants granted to the following persons:
2
Options or Warrants Exercisable
Name Prior to November 30, 2007
---- --------------------------------------
Maximilian de Clara 656,667
Geert R. Kersten 3,558,001
Patricia B. Prichep 1,161,500
Eyal Talor, Ph.D. 817,999
Daniel H. Zimmerman, Ph.D. 815,000
John Cipriano 160,000
Alexander G. Esterhazy 234,999
C. Richard Kinsolving, Ph.D. 395,000
Peter R. Young, Ph.D. 221,666
(2) Amount includes shares held in trust for the benefit of Mr. Kersten's minor
children. Geert R. Kersten is the stepson of Maximilian de Clara.
(3) Amount includes shares referred to in (1) above but excludes shares which
may be issued upon the exercise or conversion of other options, warrants
and other convertible securities previously issued by CEL-SCI.
ELECTION OF DIRECTORS
Unless the proxy contains contrary instructions, it is intended that the
proxies will be voted for the election of the current directors listed below to
serve as members of the board of directors until the next annual meeting of
shareholders and until their successors shall be elected and shall qualify.
All current directors have consented to stand for re-election. In case any
nominee shall be unable or shall fail to act as a director by virtue of an
unexpected occurrence, the proxies may be voted for such other person or persons
as shall be determined by the persons acting under the proxies in their
discretion.
Certain information concerning CEL-SCI's officers and directors follows:
Name Age Position
---- --- --------
Maximilian de Clara 76 Director and President
Geert R. Kersten, Esq. 47 Director, Chief Executive Officer and Treasurer
Patricia B. Prichep 55 Senior Vice President of Operations and
Secretary
Dr. Eyal Talor 50 Senior Vice President of Research and
Manufacturing
Dr. Daniel H. Zimmerman 65 Senior Vice President of Research, Cellular
Immunology
John Cipriano 64 Senior Vice President of Regulatory Affairs
Alexander G. Esterhazy 62 Director
Dr. C. Richard Kinsolving 69 Director
Dr. Peter R. Young 61 Director
3
Mr. Maximilian de Clara, by virtue of his position as an officer and
director of CEL-SCI, may be deemed to be the "parent" and "founder" of the
Company as those terms are defined under applicable rules and regulations of the
Securities and Exchange Commission.
The principal occupations of CEL-SCI's officers and directors, during the
past several years, are as follows:
Maximilian de Clara. has been a Director of CEL-SCI since its inception in
March l983, and has been President of CEL-SCI since July l983. Prior to his
affiliation with CEL-SCI, and since at least l978, Mr. de Clara was involved in
the management of his personal investments and personally funding research in
the fields of biotechnology and biomedicine. Mr. de Clara attended the medical
school of the University of Munich from l949 to l955, but left before he
received a medical degree. During the summers of l954 and l955, he worked as a
research assistant at the University of Istanbul in the field of cancer
research. For his efforts and dedication to research and development in the
fight against cancer and AIDS, Mr. de Clara was awarded the "Pour le Merit"
honorary medal of the Austrian Military Order "Merito Navale" as well as the
honor cross of the Austrian Albert Schweitzer Society.
Geert R. Kersten, Esq. was Director of Corporate and Investment Relations
for CEL-SCI between February 1987 and October 1987. In October of 1987, he was
appointed Vice President of Operations. In December 1988, Mr. Kersten was
appointed Director of the Company. Mr. Kersten also became CEL-SCI's Treasurer
in 1989. In May 1992, Mr. Kersten was appointed Chief Operating Officer and in
February 1995, Mr. Kersten became CEL-SCI's Chief Executive Officer. In previous
years, Mr. Kersten worked as a financial analyst with Source Capital, Ltd., an
investment advising firm in McLean, Virginia. Mr. Kersten is a stepson of
Maximilian de Clara, who is the President and a Director of CEL-SCI. Mr. Kersten
attended George Washington University in Washington, D.C. where he earned a B.A.
in Accounting and an M.B.A. with emphasis on International Finance. He also
attended law school at American University in Washington, D.C. where he received
a Juris Doctor degree.
Patricia B. Prichep has been CEL-SCI's Senior Vice President of Operations
since March 1994. Between December 1992 and March 1994, Ms. Prichep was
CEL-SCI's Director of Operations. Ms. Prichep became CEL-SCI's Corporate
Secretary in May 2000. From June 1990 to December 1992, Ms. Prichep was the
Manager of Quality and Productivity for the NASD's Management, Systems and
Support Department. Between 1982 and 1990. Ms. Prichep was Vice President and
Operations Manager for Source Capital, Ltd.
Eyal Talor, Ph.D. has been CEL-SCI's Senior Vice President of Research and
Manufacturing since March 1994. From October 1993 until March 1994, Dr. Talor
was Director of Research, Manufacturing and Quality Control, as well as the
Director of the Clinical Laboratory, for Chesapeake Biological Laboratories,
Inc. From 1991 to 1993, Dr. Talor was a scientist with SRA Technologies, Inc.,
as well as the director of SRA's Flow Cytometry Laboratory (1991-1993) and
Clinical Laboratory (1992-1993). During 1992 and 1993, Dr. Talor was also the
Regulatory Affairs and Safety Officer For SRA. Since 1987, Dr. Talor has held
various positions with the Johns Hopkins University, including course
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coordinator for the School of Continuing Studies (1989-Present), research
associate and lecturer in the Department of Immunology and Infectious Diseases
(1987-1991), and associate professor (1991-Present).
Daniel H. Zimmerman, Ph.D. has been CEL-SCI's Senior Vice President of
Cellular Immunology since January 1996. Dr. Zimmerman founded CELL-MED, Inc. and
was its president from 1987-1995. From 1973 to 1987 Dr. Zimmerman served in
various positions at Electronucleonics, Inc. including Scientist, Senior
Scientist, Technical Director and Program Manager. From 1969-1973 Dr. Zimmerman
was a Senior Staff Fellow at NIH.
John Cipriano has been CEL-SCI's Senior Vice President of Regulatory
Affairs since March 2004. Mr. Cipriano brings to CEL-SCI over 30 years of
experience in both biotech and pharmaceutical companies. In addition, he held
positions at the United States Food and Drug Administration (FDA) as Deputy
Director, Division of Biologics Investigational New Drugs, Office of Biologics
Research and Review and was the Deputy Director, IND Branch, Division of
Biologics Evaluation, Office of Biologics. Mr. Cipriano completed his B.S. in
Pharmacy from the Massachusetts College of Pharmacy in Boston, Massachusetts and
his M.S. in Pharmaceutical Chemistry from Purdue University in West Lafayette,
Indiana.
Alexander G. Esterhazy became a Director of CEL-SCI in April 1999. Since
November 1997 Mr. Esterhazy has been an independent financial advisor. Between
July 1991 and October 1997 Mr. Esterhazy was a senior partner of Corpofina S.A.
Geneva, a firm engaged in mergers, acquisitions and portfolio management.
Between January 1988 and July 1991 Mr. Esterhazy was a managing director of DG
Bank in Switzerland. During this period Mr. Esterhazy was in charge of the
Geneva, Switzerland branch of the DG Bank, founded and served as vice president
of DG Finance (Paris) and was the President and Chief Executive officer of
DG-Bourse, a securities brokerage firm.
C. Richard Kinsolving, Ph.D. has been a Director of CEL-SCI since April
2001. Since February 1999 Dr. Kinsolving has been the Chief Executive Officer of
BioPharmacon, a pharmaceutical development company. Between December 1992 and
February 1999 Dr. Kinsolving was the President of Immuno-Rx, Inc., a company
engaged in immuno-pharmaceutical development. Between December 1991 and
September 1995 Dr. Kinsolving was President of Bestechnology, Inc. a nonmedical
research and development company producing bacterial preparations for industrial
use. Dr. Kinsolving received his Ph.D. in Pharmacology from Emory University
(1970), his Masters degree in Physiology/Chemistry from Vanderbilt University
(1962), and his Bachelor's degree in Chemistry from Tennessee Tech. University
(1957).
Peter R. Young, Ph.D. has been a Director of CEL-SCI since August 2002.
Dr. Young has been a senior executive within the pharmaceutical industry in the
United States and Canada for most of his career. Over the last 20 years he has
primarily held positions of Chief Executive Officer or Chief Financial Officer
and has extensive experience with acquisitions and equity financings. Since
November 2001 Dr. Young has been the President of Agnus Dei, LLC, which acts as
a partner in an organization managing immune system clinics which treat patients
with diseases such as cancer, multiple sclerosis and hepatitis. Since January
5
2003 Dr. Young has been the President and Chief Executive Officer of SRL
Technology, Inc., a company involved in the development of pharmaceutical (drug)
delivery systems. Between 1998 and 2001 Dr. Young was the Chief Financial
Officer of Adams Laboratories, Inc. Dr. Young received his Ph.D. in Organic
Chemistry from the University of Bristol, England (1969), and his Bachelor's
degree in Honors Chemistry, Mathematics and Economics also from the University
of Bristol, England (1966).
All of CEL-SCI's officers devote substantially all of their time to
CEL-SCI's business.
Alexander G. Esterhazy, Dr. C. Richard Kinsolving and Dr. Peter R. Young
are independent directors as that term is defined in section 121(a) of the
listing standards of the American Stock Exchange.
CEL-SCI's Board of Directors met twelve times during the year ended
September 30, 2006. All of the Directors attended each of these meetings either
in person or by telephone conference call.
For purposes of electing directors at its annual meeting CEL-SCI does not
have a nominating committee or a committee performing similar functions.
CEL-SCI's board of directors does not believe a nominating committee is
necessary since CEL-SCI's board of directors is small and the board of directors
as a whole performs this function. The current nominees to the Board of
Directors were selected by a majority vote of CEL-SCI's independent directors.
CEL-SCI does not have any policy regarding the consideration of director
candidates recommended by shareholders since a shareholder has never recommended
a nominee to the board of directors. However, CEL-SCI's board of directors will
consider candidates recommended by shareholders. To submit a candidate for the
board of directors the shareholder should send the name, address and telephone
number of the candidate, together with any relevant background or biographical
information, to CEL-SCI's Chief Executive Officer, at the address shown on the
cover page of this proxy statement. The board has not established any specific
qualifications or skills a nominee must meet to serve as a director. Although
the board does not have any process for identifying and evaluating director
nominees, the board does not believe there would be any differences in the
manner in which the board evaluates nominees submitted by shareholders as
opposed to nominees submitted by any other person.
CEL-SCI does not have a policy with regard to board member's attendance at
annual meetings. All board members attended the last annual shareholder's
meeting held on November 17, 2006.
Holders of CEL-SCI's common stock can send written communications to
CEL-SCI's entire board of directors, or to one or more board members, by
addressing the communication to "the Board of Directors" or to one or more
directors, specifying the director or directors by name, and sending the
communication to CEL-SCI's offices in Vienna, Virginia. Communications addressed
6
to the Board of Directors as whole will be delivered to each board member.
Communications addressed to a specific director (or directors) will be delivered
to the director (or directors) specified.
Security holder communications not sent to the board of directors as a
whole or to specified board members are not relayed to board members.
CEL-SCI has adopted a Code of Ethics which is applicable to CEL-SCI's
principal executive, financial, and accounting officers and persons performing
similar functions. The Code of Ethics is available on CEL-SCI's website located
at www.cel-sci.com.
Executive Compensation
The following table shows in summary form the compensation received by (i)
the Chief Executive Officer of CEL-SCI and (ii) by each other executive officer
of CEL-SCI who received in excess of $100,000 during the fiscal year ended
September 30, 2006.
All
Other
Restric- Annual
ted Stock Options Compen-
Name and Princi- Fiscal Salary Bonus Awards Granted sation
pal Position Year (1) (2) (3) (4) (5)
---------------- ------ ------ ----- ---------- ------- --------
Maximilian de Clara, 2006 $363,000 $200,000 $11,600 100,000 $67,164
President 2005 $363,000 -- -- 50,000 $72,041
2004 $363,000 -- -- 50,000 $60,165
Geert R. Kersten, 2006 $386,693 -- $13,050 200,000 $18,642
Chief Executive 2005 $370,585 -- $12,700 50,000 $18,290
Officer and 2004 $366,673 -- $11,296 50,000 $18,690
Treasurer
Patricia B. Prichep 2006 $170,820 -- $ 9,628 90,000 $ 3,080
Senior Vice President 2005 $159,864 -- $ 9,404 30,000 $ 3,030
of Operations and 2004 $148,942 -- $ 7,110 50,000 $ 3,000
Secretary
Eyal Talor, Ph.D. 2006 $210,568 -- $ 9,600 80,000 $ 3,080
Senior Vice President 2005 $201,154 -- $ 8,400 30,000 $ 3,030
of Research and 2004 $192,373 -- $ 4,797 50,000 $ 3,000
Manufacturing
Daniel Zimmerman, 2006 $161,574 -- $ 9,261 60,000 $ 3,080
Ph.D, Senior Vice 2005 $154,350 -- $ 9,059 30,000 $ 3,030
President of Cellular 2004 $147,613 -- $ 7,176 50,000 $ 3,000
Immunology
7
John Cipriano 2006 $157,020 -- $ 9,000 60,000 30
Senior Vice President 2005 $150,000 -- $ 9,000 30,000 30
of Regulatory Affairs
(1) The dollar value of base salary (cash and non-cash) received. During the
year ended September 30, 2006, $47,220 of the total salaries paid to the
persons shown in the table were paid in restricted shares of CEL-SCI's
common stock.
Information concerning the issuance of these restricted shares is shown in
the following table:
Date Shares Number of Price
Were Issued Shares Issued Per Share
----------- ------------- ---------
09/20/06 81,413 $0.58
On each date the amount of compensation satisfied through the issuance of
shares was determined by multiplying the number of shares issued by the price
per share. The price per share was equal to the closing price of CEL-SCI's
common stock on the date prior to the date the shares were issued.
(2) The dollar value of bonus (cash and non-cash) received. The $200,000 paid
to Mr. de Clara was paid in restricted shares of CEL-SCI's common stock
which cannot be sold by Mr. de Clara in the public market for three years.
(3) During the periods covered by the table, the value of the shares of
restricted stock issued to Mr. de Clara as compensation for services. In
the case of all other persons listed in the table, the shares were issued
as CEL-SCI's contribution on behalf of the named officer to CEL-SCI's
401(k) retirement plan.
(4) The shares of common stock to be received upon the exercise of all stock
options granted during the periods covered by the table. See "Stock
Options" below.
(5) All other compensation received that CEL-SCI could not properly report in
any other column of the table. Amounts in the table represent automobile,
parking and other transportation expenses, plus, in the case of Maximilian
de Clara and Geert Kersten, director's fees of $8,000 each.
Long Term Incentive Plans - Awards in Last Fiscal Year
------------------------------------------------------
None.
8
Employee Pension, Profit Sharing or Other Retirement Plans
----------------------------------------------------------
During 1993 CEL-SCI implemented a defined contribution retirement plan,
qualifying under Section 401(k) of the Internal Revenue Code and covering
substantially all CEL-SCI's employees. Prior to January 1, 1998 CEL-SCI's
contribution was equal to the lesser of 3% of each employee's salary, or 50% of
the employee's contribution. Effective January 1, 1998 the plan was amended such
that CEL-SCI's contribution is now made in shares of CEL-SCI's common stock as
opposed to cash. Each participant's contribution is matched by CEL-SCI with
shares of common stock which have a value equal to 100% of the participant's
contribution, not to exceed the lesser of $1,000 or 6% of the participant's
total compensation. CEL-SCI's contribution of common stock is valued each
quarter based upon the closing bid price of its common stock. The fiscal 2006
expenses for this plan were $88,054. Other than the 401(k) Plan, CEL-SCI does
not have a defined benefit, pension plan, profit sharing or other retirement
plan.
Compensation of Directors During Year Ended September 30, 2006
--------------------------------------------------------------
Name Paid in Cash Stock Awards (1) Option Awards (2)
---- ------------ ---------------- -----------------
Alexander G. Esterhazy $ 8,000 $ 11,600 60,000
Dr. C. Richard Kinsolving $ 8,000 $ 11,600 60,000
Dr. Peter R. Young $ 8,000 $ 11,600 60,000
(1) The value of stock issued for services on the date of grant.
(2) The number of options granted during the year. The options are exercisable
at a price of $0.58 per share and expire on September 12, 2016.
Directors' fees paid to Maximilian de Clara and Geert R. Kersten ($8,000
each) are included in the Executive Compensation table.
Employment Contracts.
---------------------
In April 2005 CEL-SCI entered into a three-year employment agreement with
Mr. de Clara which expires April 30, 2008. The employment agreement provides
that CEL-SCI will pay Mr. de Clara an annual salary of $363,000 during the term
of the agreement. In the event that there is a material reduction in Mr. de
Clara's authority, duties or activities, or in the event there is a change in
the control of CEL-SCI, then the agreement allows Mr. de Clara to resign from
his position at CEL-SCI and receive a lump-sum payment from CEL-SCI equal to 18
months salary. For purposes of the employment agreement, a change in the control
of CEL-SCI means the sale of more than 50% of the outstanding shares of
CEL-SCI's Common Stock, or a change in a majority of CEL-SCI's directors.
The Employment Agreement will also terminate upon the death of Mr. de
Clara, Mr. de Clara's physical or mental disability, the conviction of Mr. de
Clara for any crime involving fraud, moral turpitude, or CEL-SCI's property, or
a breach of the Employment Agreement by Mr. de Clara. If the Employment
9
Agreement is terminated for any of these reasons, Mr. de Clara, or his legal
representatives, as the case may be, will be paid the salary provided by the
Employment Agreement through the date of termination.
On September 8, 2006 Mr. de Clara's Employment Agreement was amended and
extended to April 30, 2010. The terms of the amendment to Mr. de Clara's
employment agreement are referenced in a report on Form 8-K filed with the
Securities and Exchange Commission on September 8, 2006.
Effective September 1, 2003, CEL-SCI entered into a three-year employment
agreement with Mr. Kersten. The employment agreement provides that during the
term of the employment agreement CEL-SCI will pay Mr. Kersten an annual salary
of $370,585. In the event there is a change in the control of CEL-SCI, the
agreement allows Mr. Kersten to resign from his position at CEL-SCI and receive
a lump-sum payment from CEL-SCI equal to 24 months salary. For purposes of the
employment agreement a change in the control of CEL-SCI means: (1) the merger of
CEL-SCI with another entity if after such merger the shareholders of CEL-SCI do
not own at least 50% of voting capital stock of the surviving corporation; (2)
the sale of substantially all of the assets of CEL-SCI; (3) the acquisition by
any person of more than 50% of CEL-SCI's common stock; or (4) a change in a
majority of CEL-SCI's directors which has not been approved by the incumbent
directors.
Effective September 1, 2006 Mr. Kersten's employment agreement was
extended to September 1, 2011.
The Employment Agreement will also terminate upon the death of Mr.
Kersten, Mr. Kersten's physical or mental disability, willful misconduct, an act
of fraud against CEL-SCI, or a breach of the Employment Agreement by Mr.
Kersten. If the Employment Agreement is terminated for any of these reasons Mr.
Kersten, or his legal representatives, as the case may be, will be paid the
salary provided by the Employment Agreement through the date of termination.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
CEL-SCI has a compensation committee comprised of all of CEL-SCI's
directors, with the exception of Mr. Kersten. During the year ended September
30, 2006, Mr. de Clara was the only officer participating in deliberations of
CEL-SCI's compensation committee concerning executive officer compensation. Mr.
de Clara is not an independent member of the compensation committee.
During the year ended September 30, 2006, no director of CEL-SCI was also
an executive officer of another entity, which had an executive officer of
CEL-SCI serving as a director of such entity or as a member of the compensation
committee of such entity.
10
Stock Options
-------------
The following tables shows the options granted during the fiscal year
ended September 30, 2006, to the persons named below.
Options Granted During Fiscal Year Ended September 30, 2006.
Exercise
Grant Options Price Per Expiration
Name Date Granted (#) Share Date
------ ---- ----------- ---------- ------------
Maximilian de Clara 9/12/2006 100,000 $0.58 9/12/16
Geert R. Kersten 9/12/2006 200,000 $0.58 9/12/16
Patricia B. Prichep 9/12/2006 90,000 $0.58 9/12/16
Eyal Talor, Ph.D. 9/12/2006 80,000 $0.58 9/12/16
Daniel Zimmerman, Ph.D. 9/12/2006 60,000 $0.58 9/12/16
John Cipriano 9/12/2006 60,000 $0.58 9/12/16
Option Exercises
Shares
Acquired On Value
Name Exercise (1) Realized (2)
---- -------------------- ------------
Maximilian de Clara -- --
Geert R. Kersten -- --
Patricia Prichep -- --
Eyal Talor -- --
Daniel Zimmerman -- --
John Cipriano -- --
(1) The number of shares received upon exercise of options during the fiscal
year ended September 30, 2006.
(2) With respect to options exercised during CEL-SCI's fiscal year ended
September 30, 2006, the dollar value of the difference between the option
exercise price and the market value of the option shares purchased on the
date of the exercise of the options.
Shares underlying unexercised
Options which are: Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ------------ -------------- -------- ----------
Maximilian de Clara 1,164,999 149,999 $0.22 - $1.94 5/01/08 - 9/12/16
Geert R. Kersten 3,458,001 249,999 $0.22 - $1.94 5/01/08 - 9/12/16
Patricia B. Prichep 1,104,834 126,666 $0.22 - $1.94 7/31/08 - 9/12/16
Eyal Talor, Ph.D. 764,666 116,666 $0.22 - $1.94 8/03/08 - 9/12/16
Daniel Zimmerman, Ph.D. 768,334 96,666 $0.22 - $1.94 2/19/08 - 9/12/16
John Cipriano 90,001 119,999 $0.48 - $1.13 3/01/14 - 9/12/16
11
Stock Option, Bonus and Compensation Plans
------------------------------------------
CEL-SCI has Incentive Stock Option Plans, Non-Qualified Stock Option
Plans, Stock Bonus Plans and a Stock Compensation Plan. The Stock Option, Bonus
and Compensation Plans have been approved by CEL-SCI's stockholders. A summary
description of these Plans follows. In some cases these Plans are collectively
referred to as the "Plans".
Incentive Stock Option Plans. The Incentive Stock Option Plans authorize
the issuance of shares of CEL-SCI's common stock to persons who exercise options
granted pursuant to the Plan. Only CEL-SCI's employees may be granted options
pursuant to the Incentive Stock Option Plan.
To be classified as incentive stock options under the Internal Revenue
Code, options granted pursuant to the Plans must be exercised prior to the
following dates:
(a) The expiration of three months after the date on which an option
holder's employment by CEL-SCI is terminated (except if such
termination is due to death or permanent and total disability);
(b) The expiration of 12 months after the date on which an option holder's
employment by CEL-SCI is terminated, if such termination is due to the
Employee's permanent and total disability;
(c) In the event of an option holder's death while in the employ of
CEL-SCI, his executors or administrators may exercise, within three
months following the date of his death, the option as to any of the
shares not previously exercised;
The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.
Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the Common Stock of
CEL-SCI may not be exercisable by its terms after five years from the date of
grant. Any other option granted pursuant to the Plan may not be exercisable by
its terms after ten years from the date of grant.
The purchase price per share of Common Stock purchasable under an option
is determined by the Committee but cannot be less than the fair market value of
the Common Stock on the date of the grant of the option (or 110% of the fair
market value in the case of a person owning more than 10% of CEL-SCI's
outstanding shares).
Non-Qualified Stock Option Plans. The Non-Qualified Stock Option Plans
authorize the issuance of shares of CEL-SCI's common stock to persons that
exercise options granted pursuant to the Plans. CEL-SCI'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
12
exercise price is determined by the Committee but cannot be less than the market
price of CEL-SCI's Common Stock on the date the option is granted.
Stock Bonus Plans. Under the Stock Bonus Plans shares of CEL-SCI's common
stock may be issued to CEL-SCI's employees, directors, officers, consultants and
advisors, 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.
Stock Compensation Plan. Under the Stock Compensation Plan shares of
CEL-SCI's common stock may be issued to CEL-SCI's employees, directors,
officers, consultants and advisors, provided however that bona fide services
must be rendered by consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
Other Information Regarding the Plans. The Plans are administered by
CEL-SCI's Compensation Committee ("the Committee"), each member of which is a
director of CEL-SCI. The members of the Committee were selected by CEL-SCI's
Board of Directors and serve for a one-year tenure and until their successors
are elected. A member of the Committee may be removed at any time by action of
the Board of Directors. Any vacancies which may occur on the Committee will be
filled by the Board of Directors. The Committee is vested with the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Committee is empowered to select those persons to whom
shares or options are to be granted, to determine the number of shares subject
to each grant and to determine when, and upon what conditions, shares or options
granted under the Plans will vest or otherwise be subject to forfeiture and
cancellation.
In the discretion of the Committee, any option granted pursuant to the
Plans may include installment exercise terms such that the option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the date upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plans or Stock
Compensation Plan and any options granted pursuant to the Incentive Stock Option
Plans or the Non-Qualified Stock Option Plans will be forfeited if the "vesting"
schedule established by the Committee administering the Plan at the time of the
grant is not met. For this purpose, vesting means the period during which the
employee must remain an employee of CEL-SCI or the period of time a non-employee
must provide services to CEL-SCI. At the time an employee ceases working for
CEL-SCI (or at the time a non-employee ceases to perform services for CEL-SCI),
any shares or options not fully vested will be forfeited and cancelled. At the
discretion of the Committee payment for the shares of Common Stock underlying
options may be paid through the delivery of shares of CEL-SCI's Common Stock
having an aggregate fair market value equal to the option price, provided such
shares have been owned by the option holder for at least one year prior to such
exercise. A combination of cash and shares of Common Stock may also be permitted
at the discretion of the Committee.
Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan or Stock Compensation
Plan will generally not be transferable until the person receiving the shares
13
satisfies the vesting requirements imposed by the Committee when the shares were
issued.
The Board of Directors of CEL-SCI may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner they deem
appropriate, provided that such amendment, termination or suspension will not
adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; increase or decrease the total number of shares of
Common Stock which may be issued pursuant to the Plans except in the case of a
reclassification of CEL-SCI's capital stock or a consolidation or merger of
CEL-SCI; reduce the minimum option price per share; extend the period for
granting options; or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.
Summary. The following table shows the weighted average exercise price of
the outstanding options granted pursuant to CEL-SCI's Incentive and
Non-Qualified Stock Option Plans as of September 30, 2006, CEL-SCI's most recent
fiscal year end. CEL-SCI's Incentive and Non-Qualified Stock Option Plans have
been approved by CEL-SCI's shareholders.
Number of Securities
Number Remaining Available
of Securities For Future Issuance
to be Issued Weighted-Average Under Equity
Upon Exercise Exercise Price of Compensation Plans,
of Outstanding of Outstanding Excluding Securities
Plan category Options (a) Options Reflected in Column (a)
------------------------------------------------------------------------------------
Incentive Stock Option Plans 4,326,933 $0.65 3,606,833
Non-Qualified Stock Option Plans 7,511,362 $0.66 2,395,667
The following shows, as of August 1, 2007, the stock options and shares
granted by CEL-SCI pursuant to its Plans. Each option represents the right to
purchase one share of CEL-SCI's common stock. The shares reserved under each
Plan do not include the shares authorized by the 2007 Plans which are being
submitted to CEL-SCI's shareholders for their approval at the 2007 annual
meeting.
Total Shares
Shares Reserved for Remaining
Reserved Outstanding Options/Shares
Name of Plan Under Plans Options Shares Issued Under Plans
------------ ----------- ------------ ------------- --------------
Incentive Stock Option Plans 8,100,000 4,301,933 N/A 3,606,833
Non-Qualified Stock Option Plans 11,760,000 6,542,698 N/A 1,960,667
Stock Bonus Plans 5,940,000 N/A 2,074,923 3,864,993
Stock Compensation Plan 3,500,000 N/A 291,405 3,208,595
14
Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans 937,807
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.
Compensation Committee
During the year ending September 30, 2006 CEL-SCI had a Compensation
Committee which, was comprised of Maximilian de Clara, Alexander Esterhazy and
C. Richard Kinsolving. During the year ended September 30, 2006 the Compensation
Committee did not formerly meet as a separate committee, but rather held its
meetings in conjunction with CEL-SCI's Board of Director's meetings.
During the year ended September 30, 2006, Mr. de Clara was the only
officer participating in deliberations of CEL-SCI's compensation committee
concerning executive officer compensation. During the year ended September 30,
2006, no director of CEL-SCI was also an executive officer of another entity,
which had an executive officer of CEL-SCI serving as a director of such entity
or as a member of the compensation committee of such entity.
The following is the report of the Compensation Committee:
The key components of CEL-SCI's executive compensation program include
annual base salaries and long-term incentive compensation consisting of stock
options. It is CEL-SCI's policy to target compensation (i.e., base salary, stock
option grants and other benefits) at approximately the median of comparable
companies in the biotechnology field. Accordingly, data on compensation
practices followed by other companies in the biotechnology industry is
considered.
CEL-SCI's long-term incentive program consists exclusively of periodic
grants of stock options with an exercise price equal to the fair market value of
CEL-SCI's common stock on the date of grant. To encourage retention, the ability
to exercise options granted under the program is subject to vesting
restrictions. Decisions made regarding the timing and size of option grants take
into account the performance of both CEL-SCI and the employee, "competitive
market" practices, and the size of the option grants made in prior years. The
weighting of these factors varies and is subjective. Current option holdings are
not considered when granting options.
In April 2005 CEL-SCI entered into a three-year employment agreement with
Maximilian de Clara, CEL-SCI's President. The April 2005 employment agreement,
which is essentially the same as Mr. de Clara's two prior employment agreements,
provides that during the employment term CEL-SCI will pay Mr. de Clara a salary
of $363,000.
On September 8, 2006 Mr. de Clara's Employment Agreement was amended and
extended to April 30, 2010. The terms of the amendment to Mr. de Clara's
employment agreement are referenced in a report on Form 8-K filed with the
Securities and Exchange Commission on September 8, 2006. In amending and
renewing Mr. de Clara's employment contract CEL-SCI's Compensation Committee
considered various factors, including Mr. de Clara's performance in his area of
responsibility, Mr. de Clara's experience in his position, and Mr. de Clara's
15
length of service with the Company. During the fiscal year ending September 30,
2006 the compensation paid to Mr. de Clara was based on his April 2005
employment contract.
In August 2003, CEL-SCI entered into a three-year employment agreement
with Geert R. Kersten. The employment agreement, which is essentially the same
as Mr. Kersten's prior employment agreement, provides that during the term of
the agreement CEL-SCI will pay Mr. Kersten an annual salary of $370,585.
Effective September 1, 2006 Mr. Kersten's employment agreement was extended to
September 1, 2011. In renewing Mr. Kersten's employment contract CEL-SCI's
Compensation Committee considered various factors, including Mr. Kersten's
performance in his area of responsibility, Mr. Kersten's experience in his
position, and Mr. Kersten's length of service with CEL-SCI. During the fiscal
year ending September 30, 2006 the compensation paid to Mr. Kersten was based on
his 2003 employment contract.
As explained in Note (1) to the Executive Compensation table, during the
year ended September 30, 2006 Mr. de Clara and Mr. Kersten agreed to accept
restricted shares of CEL-SCI's common stock for part of the compensation payable
pursuant to their employment contracts.
During the year ending September 30, 2006, the compensation paid to
CEL-SCI's other executive officers was based on a variety of factors, including
the performance in the executive's area of responsibility, the executive's
individual performance, the executive's experience in his or her role, the
executive's length of service with CEL-SCI, the achievement of specific goals
established for CEL-SCI and its business, and, in certain instances, to the
achievement of individual goals.
Financial or stockholder value performance comparisons were not used to
determine the compensation of CEL-SCI' other executive officers since CEL-SCI's
financial performance and stockholder value are influenced to a substantial
degree by external factors and as a result comparing the compensation payable to
the other executive officers to CEL-SCI's financial or stock price performance
can be misleading.
During the year ended September 30, 2006 CEL-SCI granted options for the
purchase of 590,000 shares of CEL-SCI's common stock to CEL-SCI's executive
officers. In granting the options to CEL-SCI's executive officers, the Board of
Directors considered the same factors which were used to determine the cash
compensation paid to such officers.
Except as otherwise disclosed in this proxy statement, during the year
ended September 30, 2006 CEL-SCI did not issue any shares of its common stock to
CEL-SCI's officers or directors in return for services provided to CEL-SCI.
The foregoing report has been approved by the members of the Compensation
Committee:
Maximilian de Clara
Alexander Esterhazy
C. Richard Kinsolving
16
Comparison of Five Year Cumulative Total Return Among Cel-Sci Corporation, the
Amex Market Value ($U.S. and Foreign) Index, and a Peer Group
Shown below is a line graph comparing the yearly percentage change in the
cumulative total stockholder return on CEL-SCI's common stock with the
cumulative total return of the Amex Market Value Index and a Biotechnology peer
group for the five fiscal years ending September 30, 2006.
The members of the Peer Group used for purposes of the following
comparison, and their respective trading symbols, are: IDM Pharma, Inc. (IDMI),
Neoprobe Corp. (NEOP) and Immune Response Corp. (IMNR).
Cumulative Total Return
-------------------------------------
9/02 9/03 9/04 9/05 9/06
CEL-SCI CORPORATION $ 13.43 $ 69.40 $ 42.54 $ 35.07 $ 46.27
AMEX COMPOSITE 104.77 128.88 162.87 230.78 250.97
PEER GROUP 28.86 46.20 37.37 16.69 9.01
Audit Committee
During the year ended September 30, 2006 CEL-SCI had an Audit Committee
comprised of Alexander Esterhazy, C. Richard Kinsolving and Peter Young. All
members of the Audit Committee are independent as independence is defined by
Section 121(A) of the American Stock Exchange's Listing Standards. Dr. Peter
Young serves as the audit committee's financial expert. The purpose of the Audit
Committee is to review and approve the selection of CEL-SCI's auditors and
review CEL-SCI's financial statements with CEL-SCI's independent registered
public accounting firm. CEL-SCI's Audit Committee Charter was filed as an
exhibit to the proxy statement pertaining to CEL-SCI's 2003 Annual Shareholders'
Meeting.
During the fiscal year ended September 30, 2006, the Audit Committee met
four (4) times. All members of the Audit Committee attended these meetings.
The following is the report of the Audit Committee.
(1) The Audit Committee reviewed and discussed CEL-SCI's audited financial
statements for the year ended September 30, 2006 with CEL-SCI's
management.
(2) The Audit Committee discussed with CEL-SCI's independent registered
public accounting firm the matters required to be discussed by
Statement on Accounting Standards (SAS) No. 61 "Communications with
Audit Committee" as amended by SASs 89 and 90.
(3) The Audit Committee has received the written disclosures and the
letter from CEL-SCI's independent registered public accounting firm
required by Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees), and had discussed with CEL-SCI's independent registered
public accounting firm the independent registered public accounting
firm's independence; and
17
(4) Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in CEL-SCI's Annual Report on Form
10-K for the year ended September 30, 2006 for filing with the
Securities and Exchange Commission.
(5) During the year ended September 30, 2006 CEL-SCI paid BDO Seidman LLP,
CEL-SCI's independent registered public accounting firm, other audit
related fees of $45,496 for reviewing various registration statements
filed by CEL-SCI during the year. The Audit Committee is of the
opinion that these fees are consistent with maintaining its
independence from CEL-SCI.
The foregoing report has been approved by the members of the Audit
Committee:
Alexander G. Esterhazy
C. Richard Kinsolving
Peter Young
CEL-SCI's Board of Directors has adopted a written charter for the Audit
Committee, a copy of which was filed as an appendix to the proxy statement
relating to CEL-SCI's March 31, 2004 annual meeting of shareholders.
PROPOSAL TO ADOPT 2007 INCENTIVE STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2007
Incentive Stock Option Plan. The purpose of the 2007 Incentive Stock Option Plan
is to furnish additional compensation and incentives to CEL-SCI's officers and
employees.
The 2007 Incentive Stock Option Plan, if adopted, will authorize the
issuance of up to 1,000,000 shares of CEL-SCI's common stock to persons that
exercise options granted pursuant to the plan. As of the date of this Proxy
Statement CEL-SCI had not granted any options pursuant to this plan.
Any options under the 2007 Incentive Stock Option Plan must be granted
before May 11, 2017. If adopted, the 2007 Incentive Stock Option Plan will
function and be administered in the same manner as CEL-SCI's other Incentive
Stock Option Plans. The Board of Directors recommends that the shareholders of
CEL-SCI approve the adoption of the 2007 Incentive Stock Option Plan.
PROPOSAL TO ADOPT 2007 NON-QUALIFIED STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2007
Non-Qualified Stock Option Plan. CEL-SCI's employees, directors and officers,
and consultants or advisors to CEL-SCI are eligible to be granted options
pursuant to the 2007 Non-Qualified Plan as may be determined by CEL-SCI's Board
of Directors, provided however that bona fide services must be rendered by such
consultants or advisors and such services must mot be in connection with the
offer or sale of securities in a capital-raising transaction.
18
The 2007 Non-Qualified Plan, if adopted, will authorize the issuance of up
to 1,000,000 shares of CEL-SCI's common stock to persons that exercise options
granted pursuant to the Plan. As of the date of this Proxy Statement CEL-SCI had
not granted any options under the 2007 Non-Qualified Plan.
The 2007 Non-Qualified Plan will function and be administered in the same
manner as CEL-SCI's other Non-Qualified Plans. The Board of Directors recommends
that the shareholders of CEL-SCI approve the adoption of the 2007 Non-Qualified
Plan.
PROPOSAL TO ADOPT 2007 STOCK BONUS PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2007
Stock Bonus Plan. The purpose of the 2007 Stock Bonus Plan is to furnish
additional compensation and incentives to CEL-SCI's employees, directors,
officers, consultants and advisors and to allow CEL-SCI to continue to make
contributions to its 401(k) plan with shares of its common stock instead of
cash.
Since 1993 CEL-SCI has maintained a defined contribution retirement plan
(also known as a 401(k) Plan) covering substantially all CEL-SCI's employees.
Prior to January 1, 1998 CEL-SCI's contribution to the 401(k) Plan was made in
cash. Effective January 1, 1998 CEL-SCI's employees approved a change in the
plan such that CEL-SCI's contribution is now made in shares of CEL-SCI's common
stock as opposed to cash. CEL-SCI's contribution of common stock is made
quarterly and is valued based upon the price of CEL-SCI's common stock on the
American Stock Exchange. The Board of Directors is of the opinion that
contributions to the 401(k) plan with shares of CEL-SCI's common stock serves to
further align the shareholder's interest with that of CEL-SCI's employees.
The 2007 Stock Bonus Plan, if adopted, will authorize the issuance of up
to 1,000,000 shares of CEL-SCI's common stock to persons granted stock bonuses
pursuant to the plan. As of the date of this Proxy Statement CEL-SCI had not
granted any stock bonuses pursuant to the 2007 Stock Bonus Plan.
The 2007 Stock Bonus Plan will function and be administered in the same
manner as CEL-SCI's existing Stock Bonus Plans. The Board of Directors
recommends that the shareholders of CEL-SCI approve the adoption of the 2007
Stock Bonus Plans.
PROPOSAL TO AMEND CEL-SCI'S STOCK COMPENSATION PLAN
During the two years ended September 30, 2006 CEL-SCI issued 266,355
shares of its common stock to its officers, directors and employees in payment
of $154,486 in salaries, fees and other compensation owed to these persons. To
conserve cash, CEL-SCI expects that it may continue to offer its officers,
directors and employees the opportunity to receive shares of CEL-SCI's common
stock in payment of amounts owed by CEL-SCI for services rendered.
19
CEL-SCI's common stock trades on the American Stock Exchange. AMEX-listed
corporations must obtain shareholder approval for arrangements which permit
officers, directors, employees or consultants to receive a listed corporation's
shares in payment of compensation.
To comply with the AMEX requirements in this regard CEL-SCI adopted a
Stock Compensation Plan, which was approved by CEL-SCI's shareholders at the May
6, 2004 annual meeting, and which provided that up to 1,000,000 shares of
CEL-SCI'S common stock would be available for issuance under the Plan.
Shareholders subsequently approved amendments to the Stock Compensation Plan
which provided up to 3,500,000 shares would be available for issuance under the
plan.
So that CEL-SCI may continue to offer shares of its common stock in
payment of compensation owed, CEL-SCI's Board of Directors, subject to
shareholder approval, has approved an amendment to the Stock Compensation Plan
so that an additional 1,000,000 shares of restricted common stock would be
available for issuance under the Plan. The Board of Directors recommends that
the shareholders of CEL-SCI approve the amendment to the Stock Compensation
Plan.
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION SUCH THAT THE COMPANY
WOULD BE AUTHORIZED TO ISSUE 300,000,000 SHARES OF COMMON STOCK
CEL-SCI is presently authorized to issue 200,000,000 shares of common
stock. As of August 1, 2007, CEL-SCI had 114,248,590 outstanding shares of
common stock. Approximately 52,700,000 additional shares could be issued upon
the conversion of outstanding promissory notes, the payment of interest or
principal on the promissory notes, or the exercise of outstanding options and
warrants.
Due to the lack of any significant revenues, CEL-SCI has relied upon
proceeds from the private sales of its common stock, as well as securities
convertible into common stock, to meet its funding requirements.
CEL-SCI needs to increase its authorized shares of common stock to
accommodate the additional shares which may be issued if all outstanding
options, warrants and convertible securities were exercised or converted and to
allow CEL-SCI to raise additional capital through the sale of common stock or
securities convertible into common stock.
Although CEL-SCI will be required to fund its operations through the sale
of its securities until significant revenues are generated from the commercial
sale of its products, as of the date of this proxy statement CEL-SCI did not
have any definitive agreements or arrangements with any person to sell any
additional shares of its common stock, except for CEL-SCI's obligation to issue
common stock upon the exercise of outstanding options and warrants or the
conversion of.
20
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has selected BDO Seidman, LLP, an independent
registered public accounting firm, to audit the books and records of CEL-SCI for
the fiscal year ending September 30, 2007. BDO Seidman served as CEL-SCI's
independent registered public accounting firm for the fiscal year ended
September 30, 2006. A representative of BDO Seidman is expected to be present at
the shareholders' meeting.
BDO Seidman, LLP served as CEL-SCI's auditors for the years ended
September 30, 2006 and 2005. The following table shows the aggregate fees billed
to CEL-SCI during these year by BDO Seidman, LLP:
Year Ended September 30,
2006 2005
---- ----
Audit Fees $159,364 $73,205
Audit-Related Fees 45,496 9,773
Financial Information Systems -- --
Design and Implementation Fees -- --
Tax Fees -- --
All Other Fees -- --
Audit fees represent amounts billed for professional services rendered for
the audit of the CEL-SCI's annual financial statements and the reviews of the
financials statements included in CEL-SCI's 10-Q reports for the fiscal year.
Audit Related Fees represent amounts charged for acceptance procedures and
services performed concerning a financing. Before BDO Seidman, LLP was engaged
by CEL-SCI to render audit or non-audit services, the engagement was approved by
CEL-SCI's audit committee. CEL-SCI's Board of Directors is of the opinion that
the Audit Related Fees charged by BDO Seidman, LLP are consistent with BDO
Seidman, LLP maintaining its independence from CEL-SCI.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
CEL-SCI's Annual Report on Form 10-K for the year ending September 30,
2006 will be sent to any shareholder of CEL-SCI upon request. Requests for a
copy of this report should be addressed to the Secretary of CEL-SCI at the
address provided on the first page of this proxy statement.
SHAREHOLDER PROPOSALS
Any shareholder proposal which may properly be included in the proxy
solicitation material for the annual meeting of shareholders following CEL-SCI's
year ending September 30, 2007 must be received by the Secretary of CEL-SCI no
later than December 31, 2007.
21
GENERAL
The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement, and all other costs in connection with
solicitation of proxies will be paid by CEL-SCI including any additional
solicitation made by letter, telephone or telegraph. Failure of a quorum to be
present at the meeting will necessitate adjournment and will subject CEL-SCI to
additional expense. CEL-SCI's annual report, including financial statements for
the 2006 fiscal year, is included in this mailing.
CEL-SCI's Board of Directors does not intend to present and does not have
reason to believe that others will present any other items of business at the
annual meeting. However, if other matters are properly presented to the meeting
for a vote, the proxies will be voted upon such matters in accordance with the
judgment of the persons acting under the proxies.
Please complete, sign and return the enclosed proxy promptly. No postage
is required if mailed in the United States.
22
PROXY
CEL-SCI CORPORATION
This Proxy is solicited by CEL-SCI's Board of Directors
The undersigned stockholder of CEL-SCI acknowledges receipt of the Notice of
the Annual Meeting of Stockholders to be held September 14, 2007, 9:30 a.m.
local time, at the Park Hyatt Zurich, Beethoven-Strasse 21, 8002 Zurich,
Switzerland and hereby appoints Maximilian de Clara and Geert R. Kersten with
the power of substitution, as Attorneys and Proxies to vote all the shares of
the undersigned at said annual meeting of stockholders and at all adjournments
thereof, hereby ratifying and confirming all that said Attorneys and Proxies
may do or cause to be done by virtue hereof. The above named Attorneys and
Proxies are instructed to vote all of the undersigned's shares as follows:
(1) To elect the persons who shall constitute CEL-SCI's Board of Directors for
the ensuing year.
[ ] FOR all nominees listed below (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Nominees: Maximilian de Clara Geert R. Kersten Alexander G. Esterhazy
C. Richard Kinsolving Peter R. Young
(2) To approve the adoption of CEL-SCI's 2007 Incentive Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the adoption of CEL-SCI's 2007 Non-Qualified Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To approve the adoption of CEL-SCI's 2007 Stock Bonus Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To approve an amendment to CEL-SCI's Stock Compensation Plan so that an
additional 1,000,000 restricted shares of CEL-SCI's common stock are
available for issuance under the Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To amend CEL-SCI's Articles of Incorporation such that CEL-SCI would be
authorized to issue 300,000,000 shares of common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) To ratify the appointment of BDO Seidman, LLP as CEL-SCI's independent
registered public accounting firm for the fiscal year ending September 30,
2007.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To transact such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DISCRETION IS INDICATED, THIS PROXY WILL BE VOTED
IN FAVOR OF ITEMS 1 THROUGH 7.
Dated this day of , 2007.
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(Signature)
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(Signature)
Please sign your name exactly as it appears on your stock certificate. If
shares are held jointly, each holder should sign. Executors, trustees, and other
fiduciaries should so indicate when signing. Please Sign, Date and Return this
Proxy so that your shares may be voted at the meeting.