2
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
--------- -------------------------------------------
(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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to Exchange Act Rule 0-11:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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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 APRIL 21, 2005
To the Shareholders:
Notice is hereby given that the annual meeting of the shareholders of
CEL-SCI Corporation ("CEL-SCI") will be held at 4820-C Seton Drive, Baltimore,
Maryland 21215 on April 21, 2005, at 11:00 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 2005 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 2005 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 2005 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 500,000 additional restricted shares of common stock
to CEL-SCI's directors, officers, employees and consultants for services
provided to the Company;
to transact such other business as may properly come before the meeting.
March 15, 2005 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 March 15, 2005, there were 72,302,898 issued
and outstanding shares of CEL-SCI's common stock.
CEL-SCI CORPORATION
March 24, 2005 By: Geert R. Kersten
-------------------------------
Chief Executive Officer
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD,
AND SIGN, DATE AND RETURN THE PROXY CARD.
TO SAVE THE COST OF FURTHER SOLICITATION,
PLEASE MAIL YOUR PROXY CARD PROMPTLY
CEL-SCI CORPORATION
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 April 21, 2005, 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 March 22, 2005.
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 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 sets forth, as of March 15, 2005, information with
respect to 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.
Number of Percent of
Name and Address Shares (1) Class (3)
---------------- ---------- ----------
Maximilian de Clara 1,630,959 2.2%
Bergstrasse 79
6078 Lungern,
Obwalden, Switzerland
Geert R. Kersten 5,341,324 7.1%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Patricia B. Prichep 1,375,736 1.9%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Eyal Talor, Ph.D. 1,006,734 1.4%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
Daniel H. Zimmerman, Ph.D. 1,027,035 1.4%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
John Cipriano 44,804 0.1%
8229 Boone Blvd, Suite 802
Vienna, VA 22182
Alexander G. Esterhazy 173,334 0.2%
20 Chemin du Pre-Poiset
CH- 1253 Vandoeuvres
Geneve, Switzerland
C. Richard Kinsolving , Ph.D. 309,091 0.4%
P.O. Box 20193
Bradenton, FL 34204-0193
Peter R. Young , Ph.D. 94,602 0.1%
8229 Boone Blvd., Suite 802
Vienna, VA 22182
All Officers and Directors 11,003,619 14.0%
as a Group (8 persons)
* Less than 1%
(1) Includes shares issuable prior to May 31, 2005 upon the exercise of options
or warrants granted to the following persons:
Options or Warrants Exercisable
Name Prior to May 31, 2005
---- -------------------------------
Maximilian de Clara 923,332
Geert R. Kersten 2,788,000
Patricia B. Prichep 869,667
Eyal Talor, Ph.D. 596,610
Daniel H. Zimmerman, Ph.D. 594,334
John Cipriano 33,334
Alexander G. Esterhazy 173,334
C. Richard Kinsolving, Ph.D. 240,001
Peter R. Young, Ph.D. 80,001
(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 75 Director and President
Geert R. Kersten, Esq. 46 Director, Chief Executive Officer and Treasurer
Patricia B. Prichep 53 Senior Vice President of Operations and
Secretary
Dr. Eyal Talor 48 Senior Vice President of Research and
Manufacturing
Dr. Daniel H. Zimmerman 63 Senior Vice
President of Research, Cellular Immunology
John Cipriano 62 Senior Vice President of Regulatory Affairs
Alexander G. Esterhazy 60 Director
Dr. C. Richard Kinsolving 69 Director
Dr. Peter R. Young 59 Director
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. Mr. 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. Mr. Kersten 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
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 has been an independent financial advisor since
November 1997. 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
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).
CEL-SCI's Board of Directors met fifteen times during the year ending
September 30, 2004. All of the Directors attended each of these meetings either
in person or by telephone conference call.
All of CEL-SCI's officers devote substantially all of their time to
CEL-SCI's business.
CEL-SCI has an audit committee and a compensation committee. The members
of the audit committee are Alexander G. Esterhazy, Dr. C. Richard Kinsolving and
Dr. Peter Young. Dr. Peter Young serves as the audit committee's financial
expert. In this capacity, Dr. Young is independent, as that term is defined in
the listing standards of the American Stock exchange. CEL-SCI's Audit Committee
Charter was filed as an exhibit to the proxy statement pertaining to CEL-SCI's
2003 Annual Shareholders' Meeting. The members of the compensation committee are
Maximilian de Clara, Alexander Esterhazy and C. Richard Kinsolving.
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, with the exception of Mr. de Clara, attended
the last annual shareholder's meeting held on May 6, 2004.
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
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 sets forth 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, 2004.
All
Other Other
Annual Restric- Com-
Compen- ted Stock Options pensa-
Name and Princi- Fiscal Salary Bonus sation Awards Granted tion
pal Position Year (1) (2) (3) (4) (5) (6)
--------------- ------ ------ ----- ------ -------- ------- ------
Maximilian de Clara, 2004 $363,000 -- $60,165 -- 50,000 --
President 2003 $363,000 -- $65,121 -- 574,999 $72,600
2002 $363,000 -- $46,079 $89,334 75,000 --
Geert R. Kersten, 2004 $366,673 $18,690 $11,296 50,000 --
Chief Executive 2003 $354,087 -- $12,558 $ 9,244 1,890,000 $71,068
Officer and 2002 $346,324 -- $15,044 $10,929 105,000 --
Treasurer
Patricia B. Prichep 2004 $148,942 $ 3,000 $ 7,110 50,000 --
Senior Vice President 2003 $147,904 -- $ 3,000 $ 4,902 580,000 --
of Operations and 2002 $140,464 -- $ 3,000 $ 5,597 90,500 --
Secretary
Eyal Talor, Ph.D. 2004 $192,373 $ 3,000 $ 4,797 50,000 --
Senior Vice President 2003 $191,574 -- $ 3,000 $ 4,950 374,166 --
of Research and 2002 $187,075 -- $ 3,000 $ 5,702 85,000 --
Manufacturing
Daniel Zimmerman, Ph.D, 2004 $147,613 $ 3,000 $ 7,176 50,000 --
Senior Vice President 2003 $147,000 -- $ 3,000 $ 5,005 392,000 --
of Cellular Immunology 2002 $143,583 -- $ 3,000 $ 5,763 91,000 --
(1) The dollar value of base salary (cash and non-cash) received. During the
year ended September 30, 2004, $134,398 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
10/07/03 133,390 $1.00
09/15/04 19,511 $0.62
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.
(3) Any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
Amounts in the table represent automobile, parking and other transportation
expenses, plus, in the case of Maximilian de Clara and Geert Kersten,
director's fees of $8,000 each. During the year ended September 30, 2004,
$6,250 of the total Other Annual compensation paid to the persons shown in
the table were paid in restricted shares of CEL-SCI's common stock.
(4) During the periods covered by the table, the value of the shares of
restricted stock issued as compensation for services to the persons listed
in the table. In the case of Mr. de Clara the shares were issued in
consideration for past services to CEL-SCI. 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.
As of September 30, 2004, the number of shares of CEL-SCI's common stock,
owned by the officers included in the table above, and the value of such shares
at such date, based upon the market price of CEL-SCI's common stock were:
Name Shares Value
Maximilian de Clara 1,180,351 $ 672,800
Geert R. Kersten 2,537,408 $1,446,323
Patricia B. Prichep 502,164 $ 286,233
Eyal Talor, Ph.D. 408,124 $ 232,631
Daniel Zimmerman, Ph.D. 428,935 $ 244,493
Dividends may be paid on shares of restricted stock owned by CEL-SCI's
officers and directors, although CEL-SCI has no plans to pay dividends.
(5) The shares of Common Stock to be received upon the exercise of all stock
options granted during the periods covered by the table. Includes certain
options issued in connection with CEL-SCI's Salary Reduction Plans as well
as certain options purchased from CEL-SCI. See "Options Granted During
Fiscal Year Ended September 30, 2004" below.
(6) All other compensation received that CEL-SCI could not properly report in
any other column of the table including annual Company contributions or
other allocations to vested and unvested defined contribution plans, and
the dollar value of any insurance premiums paid by, or on behalf of,
CEL-SCI with respect to term life insurance for the benefit of the named
executive officer, and the full dollar value of the remainder of the
premiums paid by, or on behalf of, CEL-SCI. Amounts in the table for fiscal
2001 represent life insurance premiums. Amounts in the table for fiscal
2003 represent the value of CEL-SCI's common stock issued at below market
prices and discussed in (1) above.
Long Term Incentive Plans - Awards in Last Fiscal Year
None.
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 the Company'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 the Company'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 price of the Company's common stock. The fiscal
2004 expenses for this plan were $56,158. 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
Standard Arrangements. CEL-SCI currently pays its directors $2,000 each
per quarter, plus expenses. CEL-SCI has no standard arrangement pursuant to
which directors of CEL-SCI are compensated for any services provided as a
director or for committee participation or special assignments.
Other Arrangements. CEL-SCI has from time to time granted options to its
outside directors. See Stock Options below for additional information concerning
options granted to CEL-SCI's directors.
Employment Contracts.
In March 2002 CEL-SCI entered into a three-year employment agreement with
Mr. de Clara which expires March 31, 2005. 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 the Company, then the agreement allows Mr. de Clara to resign
from his position at the Company 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
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.
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.
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, 2004, 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, 2004, 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.
Stock Options
The following tables set forth information concerning the options granted
during the fiscal year ended September 30, 2004, to the persons named below, and
the fiscal year-end value of all unexercised options (regardless of when
granted) held by these persons.
Options Granted During Fiscal Year Ended September 30, 2004
Potential Realizable
% of Total Value at Assumed
Options Annual Rates of Stock
Granted to Exercise Price Appreciation
Options Employees in Price Per Expiration for Option Term (1)
Name Granted (#) Fiscal Year Share Date 5% 10%
------ ------- --------------- --------- ---------- ---- ----
Maximilian de Clara 50,000 6.49% $0.61 9/02/14 $15,258 $30,516
Geert R. Kersten 50,000 6.49% $0.61 9/02/14 $15,258 $30,516
Patricia B. Prichep 50,000 6.49% $0.61 9/02/14 $15,258 $30,516
Eyal Talor, Ph.D. 50,000 6.49% $0.61 9/02/14 $15,258 $30,516
Daniel Zimmerman, Ph.D. 50,000 6.49% $0.61 9/02/14 $15,258 $30,516
John Cipriano 100,000 12.99% $1.13 3/12/14 $56,530 $113,061
20,000 2.60% $0.61 9/02/14 $6,103 $12,206
------
120,000
(1) The potential realizable value of the options shown in the table assuming
the market price of CEL-SCI's Common Stock appreciates in value from the
date of the grant to the end of the option term at 5% or 10%.
Option Exercises and Year-End Option Values
Value (in $) of
Unexercised
Number of In-the-Money
Unexercised Options at Fiscal
Shares Options (3) Year-End (4)
Acquired On Value Exercisable/ Exercisable/
Name Exercise (1) Realized (2) Unexercisable Unexercisable
---- ------------ ------------ ------------- -----------------
Maximilian de Clara -- -- 741,666 / 458,332 $68,583 / $134,916
Geert R. Kersten -- -- 2,485,000 / 1,345,000 $222,600 / $442,050
Patricia Prichep -- -- 743,168 / 466,832 $75,877 / $139,438
Eyal Talor -- -- 470,556 / 327,776 $51,653 / $91,305
Daniel Zimmerman -- -- 492,335 / 341,665 $54,554 / $95,876
John Cipriano -- -- -- / 120,000 -- / --
(1) The number of shares received upon exercise of options during the fiscal
year ended September 30, 2004.
(2) With respect to options exercised during CEL-SCI's fiscal year ended
September 30, 2004, the dollar value of the difference between the option
exercise price and the market value of the option shares purchased on the
date of the exercise of the options.
(3) The total number of unexercised options held as of September 30, 2004,
separated between those options that were exercisable and those options
that were not exercisable.
(4) For all unexercised options held as of September 30, 2004, the market value
of the stock underlying those options as of September 30, 2004.
Stock Option and Bonus Plans
CEL-SCI has Incentive Stock Option Plans, Non-Qualified Stock Option Plans
and Stock Bonus Plans. All Stock Option and Bonus Plans have been approved by
the stockholders. A summary description of these Plans follows. In some cases
these Plans are collectively referred to as the "Plans".
Incentive Stock Option Plan. The Incentive Stock Option Plans collectively
authorize the issuance of up to 5,100,000 shares of CEL-SCI's Common Stock to
persons who exercise options granted pursuant to the Plan. Only Company
employees may be granted options pursuant to the Incentive Stock Option Plan.
To be classified as incentive stock options under the Internal Revenue
Code, options granted pursuant to the Plans must be exercised prior to the
following dates:
(a) The expiration of three months after the date on which an option
holder's employment by 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
collectively authorize the issuance of up to 8,760,000 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 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 Plan. Up to 2,940,000 shares of Common Stock may be granted
under the Stock Bonus Plan. Such shares may consist, in whole or in part, of
authorized but unissued shares, or treasury shares. Under the Stock Bonus Plan,
CEL-SCI's employees, directors, officers, consultants and advisors are eligible
to receive a grant of CEL-SCI's shares, provided however that bona fide services
must be rendered by consultants or advisors and such services must not be in
connection with the offer or sale of securities in a capital-raising
transaction.
Other Information Regarding the Plans. The Plans are administered by
CEL-SCI's Compensation Committee ("the Committee"), each member of which is a
director of the Company. 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 of a stock bonus or an option and to determine when, and upon what
conditions, shares or options granted under the Plans will vest or otherwise be
subject to forfeiture and cancellation.
In the discretion of the Committee, any option granted pursuant to the
Plans may include installment exercise terms such that the option becomes fully
exercisable in a series of cumulating portions. The Committee may also
accelerate the date upon which any option (or any part of any options) is first
exercisable. Any shares issued pursuant to the Stock Bonus Plan and any options
granted pursuant to the Incentive Stock Option Plan or the Non-Qualified Stock
Option Plan will be forfeited if the "vesting" schedule established by the
Committee administering the Plan at the time of the grant is not met. For this
purpose, vesting means the period during which the employee must remain an
employee of 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 will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Committee when the shares were issued.
The Board of Directors of 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 sets forth certain information, as of March 1, 2005
concerning the stock options and stock bonuses granted by CEL-SCI. Each option
represents the right to purchase one share of CEL-SCI's common stock. The total
shares reserved under each Plan does not include the shares authorized by the
2005 Plans which are being submitted to CEL-SCI's shareholders for their
approval at the 2005 annual meeting.
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 5,100,000 3,806,433 N/A 1,165,315
Non-Qualified Stock Option
Plans 8,760,000 6,044,529 N/A 1,266,505
Stock Bonus Plans 2,940,000 N/A 1,330,060 1,609,940
Of the shares issued pursuant to CEL-SCI's Stock Bonus Plans 592,944
shares were issued as part of CEL-SCI's contribution to its 401(k) plan.
The following table shows the weighted average exercise price of the
outstanding options granted pursuant to the Company's Incentive and
Non-Qualified Stock Option Plans as of September 30, 2004. The Incentive and
Non-Qualified Stock Option Plans in effect on September 30, 2004 were 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 Options Reflected in Column (a)
--------------------------------------------------------------------------------
(a)
Incentive Stock Option
Plans 3,833,100 $0.68 1,165,315
Non-Qualified Stock Option
Plans 6,899,138 $0.74 508,231
Compensation Committee
During the year ending September 30, 2004 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, 2004 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, 2004, 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,
2004, 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 March 2002 CEL-SCI entered into a three-year employment agreement with
Maximilian de Clara, CEL-SCI's President. The March 2002 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. Since the terms of the employment contract established the
compensation paid to Mr. de Clara, there was no relationship between CEL-SCI's
performance and Mr. de Clara's compensation for the last completed fiscal year.
Effective August 1, 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,
subject to the minimum annual increases of 5% per year. In renewing Mr.
Kersten's employment contract the 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, 2003 the compensation paid
to Mr. Kersten was based on his employment contract which became effective on
August 1, 2003 and Mr. Kersten's previous employment agreement.
As explained in Note (1) to the Executive Compensation table, during the
year ended September 30, 2004 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, 2004, 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, 2004 CEL-SCI granted options for the
purchase of 370,000 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.
During the year ended September 30, 2004 CEL-SCI issued restricted shares
of its common stock to the following directors in lieu of director's fees:
Maximilian de Clara (2,000 shares), Geert R. Kersten (2,000 shares), C. Richard
Kinsolving (2,000 shares) and Peter Young (2,000 shares). Except as otherwise
disclosed in this proxy statement, during the year ended September 30, 2004
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
Comparison of Five Year Cumulative Total Return Among Cel-Sci Corporation, the
Amex Market Value ($U.S. and Foreign) Index, a New Peer Group and an Old 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, 2004.
The members of the New Peer Group used for purposes of the following
comparison, and their respective trading symbols, are: Epimmune, Inc. (EPMN),
Neoprobe Corp. (NEOP) and Immune Response Corp. (IMUR).
The members of the Old Peer Group used for purposes of the following
comparison, and their respective trading symbols, are: Epimmune, Inc. (EPMN) and
Neoprobe Corp. (NEOP). The Old Peer Group was replaced with the New Peer Group
since a former member of the Old Peer Group, Antex Biologics, discontinued
operations in April 2003.
Cumulative Total Return
---------------------------------------------
9/99 9/00 9/01 9/02 9/03 9/04
CEL-SCI Corporation 100 81.05 49.85 6.70 34.60 21.21
Amex Market Value (U.S. and Foreign)100 86.09 99.58 111.10 119.99 149.07
New Peer Group 100 130.20 35.66 12.70 25.33 16.69
Old Peer Group 100 98.93 52.48 24.71 62.06 47.17
[OBJECT OMITTED]
* $100 invested on 9/30/99 in stock or index- including reinvestment of
dividends. Fiscal year ending September 30.
Audit Committee
During the year ended September 30, 2004 CEL-SCI had an Audit Committee
comprised of Alexander Esterhazy, C. Richard Kinsolving and Peter Young. The
members of the Audit Committee are independent as independence is defined by
Section 121(A) of the American Stock Exchange's Listing Standards. The purpose
of the Audit Committee is to review and approve the selection of CEL-SCI's
auditors, review CEL-SCI's financial statements with CEL-SCI's independent
auditors, and review and discuss the independent auditors' management letter
relating to CEL-SCI's internal accounting controls. During the fiscal year ended
September 30, 2004, the Audit Committee met five 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, 2004 with CEL-SCI's
management.
(2) The Audit Committee discussed with CEL-SCI's independent auditors 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 accountants 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 accountants the independent
accountants independence; and
(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, 2004 for filing with the
Securities and Exchange Commission.
(5) During the year ended September 30, 2004 CEL-SCI paid Deloitte & Touche
LLP, CEL-SCI's independent auditors, other audit related fees of
$91,787 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 Deloitte & Touche LLP 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 2005 INCENTIVE STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2005
Incentive Stock Option Plan. The purpose of the 2005 Incentive Stock Option Plan
is to furnish additional compensation and incentives to CEL-SCI's officers and
employees.
The 2005 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 2005 Incentive Stock Option Plan must be granted
before January 20, 2014. If adopted, the 2005 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 2005 Incentive Stock Option Plan.
PROPOSAL TO ADOPT 2005 NON-QUALIFIED STOCK OPTION PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2005
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 2005 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.
The 2005 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 2005 Non-Qualified Plan.
The 2005 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 2005 Non-Qualified
Plan.
PROPOSAL TO ADOPT 2005 STOCK BONUS PLAN
Shareholders are being requested to vote on the adoption of CEL-SCI's 2005
Stock Bonus Plan. The purpose of the 2005 Stock Bonus Plan is to furnish
additional compensation and incentives to CEL-SCI's officers and employees 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 2005 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 2005 Stock Bonus Plan.
The 2005 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 2005
Stock Bonus Plans.
PROPOSAL TO AMEND CEL-SCI'S STOCK COMPENSATION PLAN
During the two years ended December 31, 2004 CEL-SCI issued 3,859,034
shares of its common stock to its officers, directors and employees in payment
of $845,617 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.
CEL-SCI's common stock trades on the American Stock Exchange. In 2003 the
AMEX amended its rules so as to require AMEX listed corporations to 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.
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 500,000 shares of restricted common stock would be
available for issuance under the Plan. A copy of the amended Plan is attached to
this proxy statement. The Board of Directors recommends that the shareholders of
CEL-SCI approve the amendment to CEL-SCI's Stock Compensation Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
On February 9, 2005 Deloitte & Touche LLP ("Deloitte") notified CEL-SCI
that it would resign as CEL-SCI's independent registered public accounting firm
upon completion of its review of CEL-SCI's interim financial statements for the
quarter ended December 31, 2004. On February 14, 2005, Deloitte completed its
review and its resignation became effective.
Deloitte`s reports on CEL-SCI's financial statements for the two most
recent fiscal years did not contain an adverse opinion, or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles.
During CEL-SCI's two most recent fiscal years and the subsequent interim
period through February 14, 2005 there were no disagreements with Deloitte on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which disagreement(s), if not resolved to the
satisfaction of Deloitte, would have caused it to make reference to the subject
matter of such disagreements in connection with its reports.
Accounting Firm Fees
The fees billed to CEL-SCI by Deloitte & Touche LLP and its affiliates
were:
Year Ended September 30,
2003 2004
---- ----
Total fees billed for professional services
rendered for the audit of CEL-SCI's financial
statements and reviews of the financial statements
included in CEL-SCI's Forms 10-Q $131,049 $131,000
Financial Information Systems Design and
Implementation Fees -- --
All other fees: *
Audit Related Fees $ 50,027 $91,787
Other Non-Audit Related Fees -- --
* All other fees consist of audit related services for reviewing various
registration statements filed with the Securities and Exchange Commission by
CEL-SCI during the year.
CEL-SCI's Board of Directors is of the opinion that the other fees charged
by Deloitte & Touche LLP during fiscal 2003 ($50,027) and 2004 ($91,787) were
consistent with Deloitte & Touche LLP maintaining its independence from CEL-SCI.
As of the date of this Proxy Statement, CEL-SCI had not selected a new
auditing firm.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
CEL-SCI's Annual Report on Form 10-K/A for the year ending September 30,
2004 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, 2005 must be received by the Secretary of CEL-SCI no
later than December 31, 2005.
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 2004 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.
PROXY
CEL-SCI CORPORATION
This Proxy is solicited by the Company's Board of Directors
The undersigned stockholder of the Company, acknowledges receipt of the Notice
of the Annual Meeting of Stockholders, to be held April 21, 2005, 11:00 A.M.
local time, at 4820-C Seton Drive, Baltimore, Maryland 21215 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 directors who shall constitute the Company's Board of
Directors for the ensuing year.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) 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 the Company's 2005 Incentive Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the adoption of the Company's 2005 Non-Qualified Stock Option
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To approve the adoption of the Company's 2005 Stock Bonus Plan`.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To amend the Company's Stock Compensation Plan so that an additional
500,000 shares of restricted common stock are issuable under the Plan .
[ ] 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 5.
Dated this __ day of _____, 2005.
_________________________________
(Signature)
_________________________________
(Signature)
Please sign your name exactly as it appears on your stock certificate. If
shares are held jointly, each holder should sign. Executors, trustees, and other
fiduciaries should so indicate when signing.
Please Sign, Date and Return this Proxy so that your shares may be voted at
the meeting.