-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G13pqIAb0aqAXgvq6CYXLdv30ahfG/PU+gKEnAEJsFUugcyiy8s7By0zXuN+OSp3 O7QlRN+OgNjgcRN8lPgkyw== 0001004878-03-000108.txt : 20030924 0001004878-03-000108.hdr.sgml : 20030924 20030923173629 ACCESSION NUMBER: 0001004878-03-000108 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 REFERENCES 429: 333-106879 FILED AS OF DATE: 20030924 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CEL SCI CORP CENTRAL INDEX KEY: 0000725363 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 840916344 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-106879 FILM NUMBER: 03906674 BUSINESS ADDRESS: STREET 1: 8229 BOONE BLVD . STREET 2: SUITE 802 CITY: VIENNA STATE: VA ZIP: 22182 BUSINESS PHONE: 7035069460 MAIL ADDRESS: STREET 1: 8229 BOONE BLVD. STREET 2: SUITE 802 CITY: VIENNA STATE: VA ZIP: 22182 FORMER COMPANY: FORMER CONFORMED NAME: INTERLEUKIN 2 INC DATE OF NAME CHANGE: 19880317 S-3/A 1 amends3sept03.txt As filed with the Securities and Exchange Commission on September __, 2003. Registration No 333-106879 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-3/A Amendment No. 1 Registration Statement Under THE SECURITIES ACT OF 1933 CEL-SCI Corporation --------------------- --------------------- (Exact name of registrant as specified in charter) Colorado ------------ ---------- (State or other jurisdiction of incorporation) 8229 Boone Blvd. #802 Vienna, Virginia 22182 84-09l6344 (703) 506-9460 (IRS Employer I.D. (Address, including zip code, and Number) telephone number including area of principal executive offices) Geert Kersten 8229 Boone Blvd. #802 Vienna, Virginia 22182 (703) 506-9460 (Name and address, including zip code, and telephone number, including area code, of agent for service) Copies of all communications, including all communications sent to the agent for service, should be sent to: William T. Hart, Esq. Hart & Trinen 1624 Washington Street Denver, Colorado 80203 (303) 839-0061 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE Title of each Proposed Proposed Class of Maximum Maximum Securities Securities Offering Aggregate Amount of to be to be Price Per Offering Registration Registered Registered Share (1) Price Fee (3) - ---------- ---------- --------- ------------ ------------ Common stock (2) 2,247,831 $0.81 $1,820,743 $168 - ---------------------------------------------------------------------------- (1) Offering price computed in accordance with Rule 457(c). (2) Shares of common stock to be sold by the selling shareholder. Pursuant to Rule 416, this Registration Statement includes such indeterminate number of additional securities as may be required for issuance upon the exercise of the warrants as a result of any adjustment in the number of securities issuable by reason of the anti-dilution provisions of the Series I Warrants. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of l933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. PROSPECTUS CEL-SCI CORPORATION 2,247,831 shares of Common Stock By means of this prospectus two shareholders of CEL-SCI Corporation are offering to sell up to 1,147,831 shares of CEL-SCI's common stock plus 1,100,000 additional shares of common stock issuable upon the exercise of CEL-SCI's Series I warrants. The securities offered by this prospectus are speculative and involve a high degree of risk and should be purchased only by persons who can afford to lose their entire investment. Prospective investors should consider certain important factors described under "Risk Factors" beginning on page __ of this prospectus. These Securities Have Not Been Approved or Disapproved by the Securities and Exchange Commission Nor Has the Commission Passed Upon the Accuracy or Adequacy of this Prospectus. Any Representation to the Contrary is a Criminal Offense. CEL-SCI's common stock is traded on the American Stock Exchange. On September __, 2003 the closing price of CEL-SCI's common stock on the American Stock Exchange was $___. The date of this prospectus is September __, 2003 PROSPECTUS SUMMARY THIS SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. CEL-SCI CEL-SCI Corporation was formed as a Colorado corporation in 1983. CEL-SCI is involved in the research and development of certain drugs and vaccines. CEL-SCI manufactures MULTIKINE(R), its first, and main product, using CEL-SCI's proprietary cell culture technologies. CEL-SCI is testing MULTIKINE to determine if it is effective in creating an anti-cancer immune response in head and neck cancer patients, and in HIV-infected women with Human Papilloma Virus induced cervical dysplasia, the precursor stage before the development of cervical cancer. LEAPS, another technology of CEL-SCI, is being tested by CEL-SCI to determine if it is effective in developing potential treatments and/or vaccines against various diseases. Present target diseases are herpes simplex and malaria. Before human testing can begin with respect to a drug or biological product, preclinical studies are conducted in laboratory animals to evaluate the potential efficacy and the safety of a product. Human clinical studies generally involve a three-phase process. The initial clinical evaluation, Phase I, consists of administering the product and testing for safe and tolerable dosage levels. Phase II trials continue the evaluation of safety and determine the appropriate dosage for the product, identify possible side effects and risks in a larger group of subjects, and provide preliminary indications of efficacy. Phase III trials consist of testing for actual clinical efficacy within an expanded group of patients at geographically dispersed test sites. CEL-SCI has funded the costs associated with the clinical trials relating to CEL-SCI's technologies, research expenditures and CEL-SCI's administrative expenses with the public and private sales of shares of CEL-SCI's common stock and borrowings from third parties, including affiliates of CEL-SCI. CEL-SCI does not expect to develop commercial products for several years, if at all. CEL-SCI has had operating losses since its inception, had an accumulated deficit of approximately $(84,660,000) at June 30, 2003 and expects to incur substantial losses for the foreseeable future. CEL-SCI's executive offices are located at 8229 Boone Blvd., #802, Vienna, Virginia 22182, and its telephone number is (703) 506-9460. THE OFFERING Securities Offered: By means of this prospectus two shareholders of CEL-SCI are offering to sell 1,147,831 shares of common stock plus 1,100,000 additional shares issuable upon the exercise of CEL-SCI's Series I warrants. CEL-SCI refers to the owner of these shares as the selling shareholders in this prospectus. Common Stock Outstanding: As of September 15, 2003 CEL-SCI had 60,753,294 shares of common stock issued and outstanding. The number of outstanding shares does not give effect to shares which may be issued upon the exercise and/or conversion of options, warrants or other convertible securities held by the selling shareholders or other persons. If all outstanding warrants and convertible securities, including the warrants held by the selling shareholders, were exercised and converted, CEL-SCI would have 77,109,569 outstanding shares of common stock. See "Comparative Share Data". Risk Factors: The purchase of the securities offered by this prospectus involves a high degree of risk. Risk factors include the lack of revenues and history of loss, need for additional capital and need for FDA approval. See the "Risk Factors" section of this prospectus for additional Risk Factors. AMEX Symbol: CVM Summary Financial Data Results of Operations: Nine Months Ended Years Ended September 30, June 30, 2003 2002 2001 ------------- ---- ---- Grant Revenue and Other: $ 197,520 $ 384,939 $ 293,871 ---------- ---------- ------------ Expenses: Research and Development 1,408,225 4,699,909 7,762,213 Depreciation and Amortization 143,351 226,514 209,121 General and Administrative 1,726,265 1,754,332 3,432,437 Interest Income (40,707) (85,322) (376,221) Interest Expense 1,437,996 2,131,750 -- --------- --------- --------- Net Loss $(4,477,610) $(8,342,244) $(10,733,679) Accrued Dividends on Preferred Stock (5,844) (202,987) (53,153) Accretion of Beneficial Conversion Feature on Preferred stock (74,577) (1,444,757) (317,419) ------------ ----------- ------------ Net Loss Attributable to Common Stockholders $(4,558,031) $(9,989,988) $(11,104,251) =========== =========== ============ Loss per common share (basic and diluted) $ (0.10) $ (0.35) $ (0.51) =========== =========== ============ Weighted average common shares outstanding 47,914,264 28,746,341 21,824,273 Balance Sheet Data: June 30, 2003 September 30, 2002 September 30, 2001 Working Capital $ 614,490 $ 690,804 $2,807,229 Total Assets 3,008,673 3,771,258 4,508,920 Convertible Debt 105,702 * 639,288 -- Note Payable - Covance 199,928 * -- -- Note Payable - Cambrex 637,566 * 1,135,017 * -- Total Liabilities 1,783,610 2,709,087 507,727 Stockholders' Equity 1,225,063 1,062,171 4,001,193 * Included in Total Liabilities. Forward Looking Statements This prospectus contains various forward-looking statements that are based on CEL-SCI's beliefs as well as assumptions made by and information currently available to CEL-SCI. When used in this prospectus, the words "believe", "expect", "anticipate", "estimate" and similar expressions are intended to identify forward-looking statements. Such statements may include statements regarding seeking business opportunities, payment of operating expenses, and the like, and are subject to certain risks, uncertainties and assumptions which could cause actual results to differ materially from projections or estimates. Factors which could cause actual results to differ materially are discussed at length under the heading "Risk Factors". Should one or more of the enumerated risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Investors should not place undue reliance on forward-looking statements, all of which speak only as of the date made. RISK FACTORS Investors should be aware that this offering involves the risks described below, which could adversely affect the price of CEL-SCI's common stock. In addition to the other information contained in this prospectus, the following factors should be considered carefully in evaluating an investment in the shares offered by this prospectus. RISKS RELATED TO CEL-SCI Since CEL-SCI Has Earned Only Limited Revenues and Has a History of Losses, CEL-SCI Will Require Additional Capital to Remain in Operation. CEL-SCI has had only limited revenues since it was formed in 1983. Since the date of its formation and through June 30, 2003 CEL-SCI incurred net losses of approximately $(84,660,000). During the years ended September 30, 2000, 2001 and 2002 CEL-SCI suffered losses of $(8,478,397), $(10,733,679) and $(8,342,244) respectively. CEL-SCI has relied principally upon the proceeds of public and private sales of securities and convertible notes to finance its activities to date. All of CEL-SCI's potential products are in the early stages of development, and any commercial sale of these products will be many years away. Accordingly, CEL-SCI expects to incur substantial losses for the foreseeable future. There can be no assurance CEL-SCI will be profitable. At the present time, CEL-SCI intends to use available funds to finance CEL-SCI's operations. Accordingly, while payment of dividends rests within the discretion of the Board of Directors, no common stock dividends have been declared or paid by CEL-SCI. CEL-SCI does not presently intend to pay dividends on its common stock and there can be no assurance that common stock dividends will ever be paid. If Cost Estimates for Clinical Trials and Research Are Inaccurate, CEL-SCI Will Require Additional Capital. CEL-SCI's estimates of the costs associated with future clinical trials and research may be substantially lower than the actual costs of these activities. If CEL-SCI's cost estimates are incorrect, CEL-SCI will need additional funding for its research efforts. If Cel-Sci cannot obtain additional capital, Cel-Sci may have to delay or postpone development and research expenditures which may influence Cel-Sci's ability to produce a timely and competitive product. Clinical and other studies necessary to obtain approval of a new drug can be time consuming and costly, especially in the United States, but also in foreign countries. The different steps necessary to obtain regulatory approval, especially that of the Food and Drug Administration, involve significant costs and may require several years to complete. CEL-SCI expects that it will need additional financing over an extended period of time in order to fund the costs of future clinical trials, related research, and general and administrative expenses. Although CEL-SCI's equity line of credit agreement is expected to be a source of funding, the amounts which CEL-SCI is able to draw from the equity line during each drawdown period may not satisfy CEL-SCI's capital needs. Any failure to obtain or any delay in obtaining required regulatory approvals may adversely affect the ability of CEL-SCI or potential licensees to successfully market any products they may develop. Therapeutic agents, drugs and diagnostic products are subject to approval, prior to general marketing, by the FDA in the United States and by comparable agencies in most foreign countries. The process of obtaining FDA and corresponding foreign approvals is costly and time consuming, particularly for pharmaceutical products such as those which might ultimately be developed by CEL-SCI, VTI or its licensees, and there can be no assurance that such approvals will be granted. Also, the extent of adverse government regulations which might arise from future legislative or administrative action cannot be predicted. CEL-SCI has, at the present time, only one source of multikine and if this source could not, for any reason, supply CEL-SCI with Multikine, CEL-SCI estimates that it would take approximately six to ten months to obtain supplies of Multikine under an alternative manufacturing arrangement, in which case CEL-SCI may have to delay its research and development activities. CEL-SCI has an agreement with an unrelated corporation for the production, until 2006, of Multikine. CEL-SCI does not know what cost it would incur to obtain an alternative source of supply. CEL-SCI may not be able to achieve or maintain a competitive position and other technological developments may result in CEL-SCI's proprietary technologies becoming uneconomical or obsolete. The biomedical field in which CEL-SCI is involved is undergoing rapid and significant technological change. The successful development of therapeutic agents from CEL-SCI's compounds, compositions and processes through CEL-SCI-financed research or as a result of possible licensing arrangements with pharmaceutical or other companies, will depend on its ability to be in the technological forefront of this field. Many pharmaceutical and biotechnology companies are developing products for the prevention or treatment of cancer and infectious diseases. Many of these companies have substantial financial, research and development, and marketing resources and are capable of providing significant long-term competition either by establishing in-house research groups or by forming collaborative ventures with other entities. In addition, both smaller companies and non-profit institutions are active in research relating to cancer and infectious diseases and are expected to become more active in the future. CEL-SCI's Patents Might Not Protect CEL-SCI's Technology from competitors, in which case CEL-SCI may not have any advantage over competitors in selling any products which it may develop. Certain aspects of CEL-SCI's technologies are covered by U.S. and foreign patents. In addition, CEL-SCI has a number of patent applications pending. There is no assurance that the applications still pending or which may be filed in the future will result in the issuance of any patents. Furthermore, there is no assurance as to the breadth and degree of protection any issued patents might afford CEL-SCI. Disputes may arise between CEL-SCI and others as to the scope and validity of these or other patents. Any defense of the patents could prove costly and time consuming and there can be no assurance that CEL-SCI will be in a position, or will deem it advisable, to carry on such a defense. Other private and public concerns, including universities, may have filed applications for, or may have been issued, patents and are expected to obtain additional patents and other proprietary rights to technology potentially useful or necessary to CEL-SCI. The scope and validity of such patents, if any, the extent to which CEL-SCI may wish or need to acquire the rights to such patents, and the cost and availability of such rights are presently unknown. Also, as far as CEL-SCI relies upon unpatented proprietary technology, there is no assurance that others may not acquire or independently develop the same or similar technology. CEL-SCI's first MULTIKINE patent expired in 2000. Since CEL-SCI does not know if it will ever be able to sell MULTIKINE on a commercial basis, CEL-SCI cannot predict what effect the expiration of this patent will have on CEL-SCI. Notwithstanding the above, CEL-SCI believes that trade secrets and later issued patents will protect the technology associated with MULTIKINE. Although CEL-SCI has product liability insurance for MULTIKINE, the successful prosecution of a product liability case against CEL-SCI could have a materially adverse effect upon its business if the amount of any judgment exceeds CEL-SCI's insurance coverage. CEL-SCI is dependent for its success on the continued availability of its executive officers and the loss of management and scientific personnel could adversely affect CEL-SCI. The loss of the services of any of CEL-SCI's executive officers could have an adverse effect on CEL-SCI's business. CEL-SCI does not carry key man life insurance on any of its officers. CEL-SCI's future success will also depend upon its ability to attract and retain qualified scientific personnel. There can be no assurance that CEL-SCI will be able to hire and retain such necessary personnel. RISKS RELATED TO THIS OFFERING Since the Market Price for CEL-SCI's Common Stock is Volatile, Investors in This Offering May Not Be Able to Sell Any of CEL-SCI's Shares at a Profit. The market price of CEL-SCI's common stock, as well as the securities of other biopharmaceutical and biotechnology companies, have historically been highly volatile, and the market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. Factors such as fluctuations in CEL-SCI's operating results, announcements of technological innovations or new therapeutic products by CEL-SCI or its competitors, governmental regulation, developments in patent or other proprietary rights, public concern as to the safety of products developed by CEL-SCI or other biotechnology and pharmaceutical companies, and general market conditions may have a significant effect on the market price of CEL-SCI's common stock. Shares issuable upon the exercise of options and warrants, or the conversion of promissory notes may substantially increase the number of shares available for sale in the public market and may depress the price of CEL-SCI's common stock. Options CEL-SCI has issued options to its officers, directors, employees and consultants which allow the holders to acquire additional shares of CEL-SCI's common stock. In some cases CEL-SCI has agreed that, at its expense, it will make appropriate filings with the Securities and Exchange Commission so that the securities issuable upon the exercise of the options will be available for public sale. Such filings could result in substantial expense to CEL-SCI and could hinder future financings by CEL-SCI. Until the options expire, the holders will have an opportunity to profit from any increase in the market price of CEL-SCI's common stock without assuming the risks of ownership. Holders of the options may exercise them at a time when CEL-SCI could obtain additional capital on terms more favorable than those provided by the options. The exercise of the options will dilute the voting interest of the owners of presently outstanding shares of CEL-SCI's common stock and may adversely affect the ability of CEL-SCI to obtain additional capital in the future. The sale of the shares of common stock issuable upon the exercise of the options could adversely affect the market price of CEL-SCI's stock. Series E, F and G Warrants In August 2001 three private investors exchanged their warrants for CEL-SCI's Series E warrants. The Series E warrants allow the holders to purchase up to 815,351 shares of CEL-SCI's common stock at a price of $1.19 per share at any time prior to August 16, 2004 and 23,758 shares of CEL-SCI's common stock at a price of $0.77 per share at any time prior to August 17, 2006. In December 2001 and January 2002, CEL-SCI sold Series F convertible notes, plus Series F warrants, to a group of private investors for $1,600,000. As of December 31, 2002 all of the Series F notes had been converted into 6,592,461 shares of CEL-SCI's common stock. The Series F warrants collectively allow the holders to purchase up to 420,000 shares of CEL-SCI's common stock at a price of $0.153 per share at any time prior to December 31, 2008. In July and September 2002 CEL-SCI sold Series G convertible notes, plus Series G warrants, to a group of private investors for $1,300,000. As of June 20, 2003 all of the Series G notes had been converted into 8,390,746 shares of CEL-SCI's common stock. The Series G warrants collectively allow the holders to purchase up to 450,000 shares of CEL-SCI's common stock at a price of $0.145 per share at any time prior to July 12, 2009. The exercise price of the Series F and G warrants, and the number of shares issuable upon the exercise of the Series F and G warrants, are subject to adjustment under those conditions explained in the section of the prospectus entitled "Description of Securities". The sale of common stock issued or issuable upon the exercise of the Series E, F or G warrants, or the perception that such sales could occur, could adversely affect the market price of CEL-SCI's common stock. Series H Convertible Notes and Series H Warrants In January and July 2003 CEL-SCI sold Series H convertible notes, plus Series H warrants, to a group of private investors for $1,350,000. At the holder's option the notes are convertible into shares of CEL-SCI's common stock equal in number to the amount determined by dividing each $1,000 of note principal to be converted by the Conversion Price. If the closing price of CEL-SCI's common stock is less than $0.50 on any conversion date, the Conversion Price will be 76% of the average of the three lowest daily trading prices of CEL-SCI's common stock on the American Stock Exchange during the 15 trading days immediately prior to the conversion date. If the closing price of CEL-SCI's common stock is $0.50 or greater on any conversion date, the Conversion Price will be 70% of the average of the three lowest daily trading prices of CEL-SCI's common stock on the American Stock Exchange during the 15 trading days immediately prior to the conversion date. As of September 15, 2003 Series H notes in the principal amount of $1,050,000 had been converted into 2,637,415 shares of CEL-SCI's common stock. The Series H warrants allow the holders to purchase up to 550,000 shares of CEL-SCI's common stock at a price of $0.25 per share at any time prior to January 7, 2010. The Conversion Price, the warrant exercise price, and the number of shares issuable upon the exercise of the Series H warrants are subject to adjustment under those conditions explained in the section of the prospectus entitled "Description of Securities". The sale of common stock upon the conversion of the Series H notes or the exercise of the Series H warrants, or the perception that such sales could occur, could adversely affect the market price of CEL-SCI's common stock. Cambrex Bio Sciences Note In November 2001 CEL-SCI gave a promissory note in the principal amount of $1,172,517 to Cambrex Bio Sciences, Inc. The note represented the cost of CEL-SCI's use of the Cambrex manufacturing facility for the three months ended January 10, 2002 to produce MULTIKINE for CEL-SCI's clinical trials. The amount due Cambrex bears interest at the prime interest rate, plus 3%, which is adjusted monthly. The note is due in full, including accrued interest, on January 2, 2004. As of September 15, 2003 CEL-SCI had made $485,525 in principal payments on the note. Cambrex, at its option, may convert all or part of the amount due Cambrex into shares of CEL-SCI's common stock. The number of shares to be issued to Cambrex upon any conversion of the note will be determined by dividing that portion of the note to be converted by the Conversion Price. The "Conversion Price" is an amount equal to 90% of the average of the closing prices of CEL-SCI's common stock for the three trading days immediately prior to the conversion date. The Conversion Price may not be less than $0.22. As of September 15, 2003 Cambrex had not converted any part of the note into shares of CEL-SCI's common stock. Equity Line of Credit An unknown number of shares of common stock, which may be sold by means of a separate registration statement filed with the Securities and Exchange Commission, are issuable under a equity line of credit arrangement to Rubicon Group Ltd. As CEL-SCI sells shares of its common stock to Rubicon Group under the equity line of credit, and Rubicon Group sells the common stock to third parties, the price of CEL-SCI's common stock may decrease due to the additional shares in the market. If CEL-SCI decides to draw down on the equity line of credit as the price of its common stock decreases, CEL-SCI will be required to issue more shares of its common stock for any given dollar amount invested by Rubicon Group, subject to the minimum selling price specified by CEL-SCI. The more shares that are issued under the equity line of credit, the more CEL-SCI's then outstanding shares will be diluted and the more CEL-SCI's stock price may decrease. Any decline in the price of CEL-SCI's common stock may encourage short sales, which could place further downward pressure on the price of CEL-SCI's common stock. Short selling is a practice of selling shares which are not owned by a seller with the expectation that the market price of the shares will decline in value after the sale. See "Comparative Share Data" for more information concerning the equity line. Series I Warrants In May 2003 CEL-SCI sold shares of its common stock plus Series I warrants to a private investor. The Series I warrants allow the holder to purchase 1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per share at any time prior to May 30, 2006. The shares issuable upon the exercise of the Series I warrants, as well as 1,100,000 shares of CEL-SCI's common stock, which are owned by the holder of the Series I warrants, are being offered for sale by means of this prospectus. See "Selling Shareholders". COMPARATIVE SHARE DATA Number of Note Shares Reference Shares outstanding as of September 15, 2003 60,753,294 Shares to be sold in this Offering: 2,247,831 A The number of shares outstanding as of September 15, 2003 excludes shares which may be issued upon the exercise of options or warrants or the conversion of notes described below. Other Shares Which May Be Issued: The following table lists additional shares of CEL-SCI's common stock which may be issued pursuant to the equity line of credit agreement and as the result of the exercise of other outstanding options or warrants issued by CEL-SCI: Number of Note Shares Reference Shares issuable upon conversion of 556,000 B Series H notes Shares issuable upon exercise of 550,000 B Series H warrants Shares issuable upon exercise of Series E, F and G warrants 1,709,109 C Shares issuable upon exercise of equity line warrants 200,800 D Shares issuable upon conversion of Cambrex note 946,000 E Shares issuable pursuant to equity line of credit Unknown F Shares issuable upon exercise of equity line warrants 395,726 F Shares issuable upon exercise of options and 10,698,640 G warrants granted to CEL-SCI's officers, directors, employees, consultants, and third parties Shares issuable upon exercise of options 200,000 H granted to investor relations consultants A. In May 2003, CEL-SCI entered into an agreement with Eastern Biotech which provided Eastern Biotech with the following (i) the exclusive right to distribute MULTIKINE and CEL-1000 in Greece, Serbia and Croatia, (ii) a royalty equal to 1% of CEL-SCI's net sales of MULTIKINE and CEL-1000 prior to May 30, 2033, (iii) 1,100,000 shares of CEL-SCI's common stock and, (iv) Series I warrants which allow Eastern Biotech to purchase an additional 1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per share at any time prior to May 30, 2006. In consideration for the above Eastern Biotech paid CEL-SCI $500,000. In August 2001 Mooring Capital Fund LLC and two other investors exchanged 3,588,564 shares of CEL-SCI's common stock which they owned, plus unexercised warrants, for 6,288 shares of CEL-SCI's Series E Preferred stock. The Series E Preferred shares were convertible into shares of CEL-SCI's common stock and as of August 31, 2003 all of the Series E Preferred shares had been converted into 5,821,450 shares of CEL-SCI's common stock. Each Series E Preferred share was entitled to a quarterly dividend of $60 per share. In August 2003 CEL-SCI issued 47,831 shares of its common stock in payment of approximately $26,000 in accrued and unpaid dividends which were owed to Mooring Capital Fund. The shares held by Eastern Biotech and Mooring Capital Fund, LLC, as well as the shares issuable upon the exercise of the Series I warrants, are being offered for public sale by means of this prospectus. B. In January and July 2003, CEL-SCI sold Series H convertible notes, plus Series H warrants, to a group of private investors for $1,350,000. At the holder's option the notes are convertible into shares of CEL-SCI's common stock equal in number to the amount determined by dividing each $1,000 of note principal to be converted by the Conversion Price. If the closing price of CEL-SCI's common stock is less than $0.50 on any conversion date, the Conversion Price will be 76% of the average of the three lowest daily trading prices of CEL-SCI's common stock on the American Stock Exchange during the 15 trading days immediately prior to the conversion date. If the closing price of CEL-SCI's common stock is $0.50 or greater on any conversion date, the Conversion Price will be 70% of the average of the three lowest daily trading prices of CEL-SCI's common stock on the American Stock Exchange during the 15 trading days immediately prior to the conversion date. The Conversion Price may not be less than $0.16. However, if CEL-SCI's common stock trades for less than $0.21 per share for a period of 20 consecutive trading days, the $0.16 minimum price will no longer be applicable. The Series H warrants allow the holders to purchase up to 550,000 shares of CEL-SCI's common stock at a price of $0.25 per share at any time prior to January 7, 2010. The Conversion Price, the warrant exercise price, and the number of shares issuable upon the exercise of the warrants are subject to adjustment under those conditions explained in the section of the prospectus entitled "Description of Securities". As of September 15, 2003 Series H notes in the principal amount of $1,050,000 had been converted into 2,637,415 shares of CEL-SCI's common stock. The actual number of additional shares issuable upon the conversion of the Series H notes will vary depending upon a number of factors, including the price of CEL-SCI's common stock at certain dates. Accordingly, the number of shares which may be issued upon the conversion of the Series H notes cannot be determined at this time. However, based upon the market price of CEL-SCI's common stock on September 15, 2003, CEL-SCI would be required to issue approximately 556,000 shares of common stock if all outstanding notes were converted on September 15, 2003. C. In August 2001 three private investors exchanged their warrants for CEL-SCI's Series E warrants. The Series E warrants collectively allow the holders to purchase up to 815,351 additional shares of CEL-SCI's common stock at a price of $1.19 per share at any time prior to August 16, 2004 and 23,758 shares of CEL-SCI's common stock at a price of $0.77 per share at any time prior to August 17, 2006. In December 2001 and January 2002, CEL-SCI sold Series F convertible notes, plus Series F warrants, to a group of private investors for $1,600,000. As of December 31, 2002 all of the Series F notes had been converted into 6,592,461 shares of CEL-SCI's common stock. The Series F warrants presently allow the holders to purchase up to 420,000 shares of CEL-SCI's common stock at a price of $0.153 per share at any time prior to December 31, 2008. In July and September 2002, CEL-SCI sold Series G convertible notes, plus Series G warrants, to a group of private investors for $1,300,000. As of June 20, 2003 all of the Series G notes had been converted into 8,390,746 shares of CEL-SCI's common stock. The Series G warrants allow the holders to purchase up to 450,000 shares of CEL-SCI's common stock at a price of $0.145 per share at any time prior to July 12, 2009. The warrant exercise price, and the number of shares issuable upon the exercise of the Series F and Series G warrants are subject to adjustment under those conditions explained in the section of the prospectus entitled "Description of Securities". D. In 2001, CEL-SCI entered into an equity line of credit agreement with Paul Revere Capital Partners. During the term the equity line of credit, which expired in June 2003, CEL-SCI received net proceeds of $2,074,692 from the sale of 5,430,960 shares of common stock pursuant to the terms of the equity line. As consideration for extending the equity line of credit, CEL-SCI granted Paul Revere Capital Partners warrants to purchase 200,800 shares of common stock at a price of $1.64 per share at any time prior to April 11, 2004. E. In November 2001 CEL-SCI gave a promissory note in the principal amount of $1,172,517 to Cambrex Bio Sciences, Inc. The note represented the cost of CEL-SCI's use of the Cambrex manufacturing facility for the three months ended January 10, 2002 to produce MULTIKINE for CEL-SCI's clinical trials. The amount due Cambrex bears interest at the prime interest rate, plus 3%, which is adjusted monthly. The note is due in full, including accrued interest, on January 2, 2004. As of September 15, 2003 CEL-SCI had made $485,525 in principal payments on the note. Cambrex, at its option, may convert all or part of the amount due Cambrex into shares of CEL-SCI's common stock. The number of shares to be issued to Cambrex upon any conversion of the note will be determined by dividing that portion of the note to be converted by the Conversion Price. The "Conversion Price" is an amount equal to 90% of the average of the closing prices of CEL-SCI's common stock for the three trading days immediately prior to the conversion date. The Conversion Price may not be less than $0.22. As of September 15, 2003 Cambrex had not converted any part of the note into shares of CEL-SCI's common stock. The actual number of additional shares issuable upon the conversion of the Cambrex note will vary depending upon a number of factors, including the price of CEL-SCI's common stock at certain dates. Accordingly, the number of shares which may be issued upon the conversion of the Cambrex note cannot be determined at this time. However, based upon the market price of CEL-SCI's common stock on September 15, 2003, CEL-SCI would be required to issue approximately 946,000 shares of common stock if all outstanding notes were converted on September 15, 2003. F. An unknown number of shares of common stock are issuable under the equity line of credit agreement between CEL-SCI and Rubicon Group, Ltd. As consideration for extending the equity line of credit, CEL-SCI granted Rubicon Group warrants to purchase 395,726 shares of common stock at a price of $0.83 per share at any time prior to September 16, 2008. Under the equity line of credit agreement, Rubicon Group has agreed to provide CEL-SCI with up to $10,000,000 of funding over a two year period. During this period, CEL-SCI may request a drawdown under the equity line of credit by selling shares of its common stock to Rubicon Group and Rubicon Group will be obligated to purchase the shares. CEL-SCI may request a drawdown once every 22 trading days, although CEL-SCI is under no obligation to request any drawdowns under the equity line of credit. During the 22 trading days following a drawdown request, CEL-SCI will calculate the amount of shares it will sell to Rubicon Group and the purchase price per share. The purchase price per share of common stock will be based on the daily volume weighted average price of CEL-SCI's common stock during each of the 22 trading days immediately following the drawdown date, less a discount of 11%. CEL-SCI may request a drawdown by faxing a drawdown notice to Rubicon Group, stating the amount of the drawdown and the lowest daily volume weighted average price, if any, at which CEL-SCI is willing to sell the shares. The lowest volume weighted average price will be set by CEL-SCI's Chief Executive Officer in his sole and absolute discretion. If CEL-SCI sets a minimum price which is too high and CEL-SCI's stock price does not consistently meet that level during the 22 trading days after its drawdown request, the amount CEL-SCI can draw and the number of shares CEL-SCI will sell to Rubicon Group will be reduced. On the other hand, if CEL-SCI sets a minimum price which is too low and its stock price falls significantly but stays above the minimum price, CEL-SCI will have to issue a greater number of shares to Rubicon Group based on the reduced market price. As of September 19, 2003 CEL-SCI had not requested any drawdowns under the equity line of credit. G. The options are exercisable at prices ranging from $0.16 to $11.00 per share. CEL-SCI may also grant options to purchase additional shares under its Incentive Stock Option and Non-Qualified Stock Option Plans. H. CEL-SCI has granted options for the purchase of 200,000 shares of common stock to certain investor relations consultants in consideration for services provided to CEL-SCI. The options are exercisable at prices ranging between $1.63 and $2.50 per share and expire between February 2004 and June 2006. The shares referred to in Notes B, C, D, F and G are being, or will be, offered for sale by means of separate registration statements which have been filed with the Securities and Exchange Commission. SELLING SHAREHOLDERS By means of this prospectus two shareholders of CEL-SCI are offering to sell 1,147,831 shares of common stock plus 1,100,000 additional shares issuable upon the exercise of CEL-SCI's Series I warrants. CEL-SCI refers to the owners of these shares and the Series I warrants as the selling shareholders in this prospectus. CEL-SCI will not receive any proceeds from the sale of the shares by the selling shareholders. The name of, and the shares to be sold by, the selling shareholders are: Shares Which Shares to Owner- May be Acquired be Sold ship Shares Upon Exercise of in this After Name Owned Series I Warrants (1) Offering Offering - ---------------- ------ --------------------- --------- -------- Eastern Biotech 1,100,000 1,100,000 2,200,000 -- Mooring Capital Fund LLC 47,831 -- 47,831 -- (1) The Series I warrants allow the holders to initially purchase up to 1,100,000 shares of CEL-SCI's common stock at a price of $0.25 per share at any time prior to January 7, 2010. For purposes of the foregoing table, it is assumed that all shares owned, or which may be acquired, by the selling shareholders are sold to the public by means of this prospectus. Plan of Distribution The selling shareholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling shareholders may use any one or more of the following methods when selling shares: o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange; o privately negotiated transactions; o short sales; o broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share; o a combination of any such methods of sale; and o any other method permitted pursuant to applicable law. The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. The selling shareholders may also engage in short sales against the box, puts and calls and other transactions in securities of CEL-SCI or derivatives of CEL-SCI securities and may sell or deliver shares in connection with these trades. The selling shareholders may pledge its shares to their brokers under the margin provisions of customer agreements. If a selling shareholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling shareholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The selling shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. CEL-SCI is required to pay all fees and expenses incident to the registration of the shares. CEL-SCI has advised the selling shareholders that in the event of a "distribution" of the shares owned by the selling shareholders, the selling shareholders, any "affiliated purchasers", and any broker/dealer or other person who participates in such distribution may be subject to Rule 102 under the Securities Exchange Act of 1934 ("1934 Act") until their participation in that distribution is completed. A "distribution" is defined in Rule 102 as an offering of securities "that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods". CEL-SCI has also advised the selling shareholders that Rule 102 under the 1934 Act prohibits any "stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing or stabilizing the price of the common stock in connection with this offering. Rule 101 makes it unlawful for any person who is participating in a distribution to bid for or purchase stock of the same class as is the subject of the distribution. DESCRIPTION OF SECURITIES Common Stock CEL-SCI is authorized to issue 100,000,000 shares of common stock, (the "common stock"). Holders of common stock are each entitled to cast one vote for each share held of record on all matters presented to shareholders. Cumulative voting is not allowed; hence, the holders of a majority of the outstanding common stock can elect all directors. Holders of common stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor and, in the event of liquidation, to share pro rata in any distribution of CEL-SCI's assets after payment of liabilities. The board is not obligated to declare a dividend. It is not anticipated that dividends will be paid in the foreseeable future. Holders of common stock do not have preemptive rights to subscribe to additional shares if issued by CEL-SCI. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. All of the outstanding shares of common stock are fully paid and non-assessable and all of the shares of common stock offered as a component of the Units will be, upon issuance, fully paid and non-assessable. Preferred Stock CEL-SCI is authorized to issue up to 200,000 shares of preferred stock. CEL-SCI's Articles of Incorporation provide that the Board of Directors has the authority to divide the preferred stock into series and, within the limitations provided by Colorado statute, to fix by resolution the voting power, designations, preferences, and relative participation, special rights, and the qualifications, limitations or restrictions of the shares of any series so established. As the Board of Directors has authority to establish the terms of, and to issue, the preferred stock without shareholder approval, the preferred stock could be issued to defend against any attempted takeover of CEL-SCI. Series E Warrants The Series E warrants collectively allow the holders to purchase up to 815,351 additional shares of CEL-SCI's common stock at a price of $1.19 per share at any time prior to August 16, 2004 and 23,758 shares of CEL-SCI's common stock at a price of $0.77 per share at any time prior to August 17, 2006. Series F and Series G Warrants In December 2001 and January 2002, CEL-SCI sold Series F convertible notes, plus Series F warrants, to a group of private investors for $1,600,000. All of the Series F convertible notes have since been converted into shares of CEL-SCI's common stock. In July and September 2002 CEL-SCI sold Series G convertible notes, plus Series G warrants, to a group of private investors for $1,300,000. All of the Series G convertible notes have since been converted into shares of CEL-SCI's common stock. As of September 15, 2003 the Series F warrants collectively allowed the holders to purchase 420,000 share of CEL-SCI's common stock at a price of $0.153 per share at any time prior to December 31, 2008. Every three months after August 17, 2003, the exercise price of the Series F warrants will be adjusted to an amount equal to 84% of the average of the 3 lowest daily trading prices of CEL-SCI's common stock on the American Stock Exchange during the 20 trading days immediately prior to the three month adjustment date, provided that the adjusted price is lower than the warrant exercise price on the adjustment date. As of September 15, 2003 the Series G warrants collectively allowed the holders to purchase up to 450,000 shares of CEL-SCI's common stock at a price of $0.145 per share at any time prior to July 12, 2009. Every three months after September 9, 2003, the exercise price of the Series G warrants will be adjusted to an amount equal to 84% of the average of the 3 lowest daily trading prices of CEL-SCI's common stock on the American Stock Exchange during the 20 trading days immediately prior to the three month adjustment date, provided that the adjusted price is lower than the warrant exercise price on that date. If CEL-SCI sells any additional shares of common stock, or any securities convertible into common stock at a price below the then applicable exercise price of the Series F or Series G warrants, the warrant exercise price will be lowered to the price at which the shares were sold or the lowest price at which the securities are convertible, as the case may be. If the warrant exercise price is adjusted, the number of shares of common stock issuable upon the exercise of the warrant will be increased by the product of the number of shares of common stock issuable upon the exercise of the warrant immediately prior to the sale multiplied by the percentage by which the warrant exercise price is reduced. If CEL-SCI sells any additional shares of common stock, or any securities convertible into common stock at a price below the market price of CEL-SCI's common stock, the exercise price of the Series F or Series G warrants will be lowered by a percentage equal to the price at which the shares were sold or the lowest price at which the securities are convertible, as the case may be, divided by the then prevailing market price of CEL-SCI's common stock. If the warrant exercise price is adjusted, the number of shares of common stock issuable upon the exercise of the warrant will be increased by the product of the number of shares of common stock issuable upon the exercise of the warrant immediately prior to the sale multiplied by the percentage determined by dividing the price at which the shares were sold by the market price of CEL-SCI's common stock on the date of sale. However, neither the exercise price of the Series F or Series G warrants nor the shares issuable upon the exercise of the Series F or Series G warrants will be adjusted as the result of shares issued in connection with a Permitted Financing. A Permitted Financing involves shares of common stock issued or sold: o in connection with a merger or acquisition; o upon the exercise of options or the issuance of common stock to CEL-SCI's employees, officers, directors, consultants and vendors in accordance with CEL-SCI's equity incentive policies; o pursuant to the conversion or exercise of securities which were outstanding prior to December 31, 2001 in the case of the Series F warrants and July 12, 2002 in the case of the Series G warrants; o to key officers of CEL-SCI in lieu of their respective salaries. The sale of the Series G and H notes and warrants did not result in any change to the exercise price of the Series F warrants. The sale of the Series H notes and warrants did not result in any change to the exercise price of the Series G warrants. Series H Notes and Warrants In January and July 2003, CEL-SCI sold Series H convertible notes, plus Series H warrants, to a group of private investors for $1,350,000. The notes bear interest at 7% per year, are due and payable on January 7, 2005 and are secured by substantially all of CEL-SCI's assets. Interest is payable quarterly with the first interest payment due on April 1, 2003. If CEL-SCI fails to make any interest payment when due, the notes will become immediately due and payable. CEL-SCI has agreed to file a registration statement with the Securities and Exchange Commission in order that the shares of common stock issuable upon the conversion of the Series H notes or the exercise of the Series H warrants may be resold in the public market. At the holder's option the Series H notes are convertible into shares of CEL-SCI's common stock equal in number to the amount determined by dividing each $1,000 of note principal to be converted by the Conversion Price. The Conversion Price is 76% of the average of the three lowest daily trading prices of CEL-SCI's common stock on the American Stock Exchange during the 15 trading days immediately prior to the conversion date. The Conversion Price may not be less than $0.16. However, if CEL-SCI's common stock trades for less than $0.21 per share for a period of 20 consecutive trading days, the $0.16 minimum price will no longer be applicable. The Conversion Price will decline to 70% if the closing price of CEL-SCI's common stock equals or exceeds $.50 on any trading day. The Conversion Price will increase to 76% on the trading day following the date that the closing price of CEL-SCI's common stock falls below $.50. The Conversion Price will decline to 60% if (i) CEL-SCI defaults in the performance of any material covenant, condition or agreement with the holders of the notes or, (ii) CEL-SCI's common stock is delisted from the American Stock Exchange. If CEL-SCI sells any additional shares of common stock, or any securities convertible into common stock at a price below the then applicable Conversion Price of the Series H notes, the Conversion Price of the Series H notes will be lowered to the price at which the shares were sold or the lowest price at which the securities are convertible. If CEL-SCI sells any additional shares of common stock, or any securities convertible into common stock at a price below the market price of CEL-SCI's common stock, the Conversion Price of the Series H notes will be lowered by a percentage equal to the price at which the shares were sold or the lowest price at which the securities are convertible, divided by the then prevailing market price of CEL-SCI's common stock. However the Conversion Price will not be adjusted as the result of shares issued in connection with a Permitted Financing. A Permitted Financing involves shares of common stock issued or sold: o in connection with a merger or acquisition; o upon the exercise of options or the issuance of common stock to CEL-SCI's employees, officers, directors, consultants and vendors in accordance with CEL-SCI's equity incentive policies; o pursuant to the conversion or exercise of securities which were outstanding prior to January 7, 2003; o to key officers of CEL-SCI in lieu of their respective salaries. CEL-SCI's agreement with the Series H note holders places the following restrictions on CEL-SCI's operations. Any of the following restrictions may be waived with the written consent of the holders of a majority of the principal amount of the Series H notes outstanding at the time the consent is required. o So long as the Series H notes are outstanding: - declare or pay any dividends (other than a stock dividend or stock split) or make any distributions to any holders of its common stock, or - purchase or otherwise acquire for value, directly or indirectly, any common or preferred stock. Until the date that 50% of the Series H notes are no longer outstanding CEL-SCI may not sell any common stock or any securities convertible into common stock. However, this restriction will not apply to shares issued in a Permitted Financing. So long as the Series H notes remain outstanding, the note holders will have a first right of refusal to participate in any subsequent financings involving CEL-SCI. If CEL-SCI enters into any subsequent financing on terms more favorable than the terms governing the notes and warrants, then the note holders may exchange notes and warrants for the securities sold in the subsequent financing. Upon the occurrence of any of the following events CEL-SCI is required to redeem the Series H notes at a price equal to 130% of then outstanding principal balance of the notes: o the suspension from listing or the failure of CEL-SCI's common stock to be listed on the American Stock Exchange for a period of five consecutive trading days; or o the effectiveness of the Registration Statement lapses for any reason or the Registration Statement is unavailable to the note holders and the lapse or unavailability continues for a period of ten consecutive trading days, provided the cause of the lapse or unavailability is not due to factors primarily within the control of the note holders. o any representation or warranty made by CEL-SCI to the note holders proves to be materially inaccurate or CEL-SCI fails to perform any material covenant or condition in its agreement with the note holders. o the completion of a merger or other business combination involving CEL-SCI and as a result of which CEL-SCI is not the surviving entity. o a purchase, tender or exchange offer accepted by the holders of more than 30% of CEL-SCI's outstanding shares of common stock. o CEL-SCI files for protection from its creditors under the federal bankruptcy code. The Series H warrants allow the holders to purchase up to 550,000 shares of CEL-SCI's common stock at a price of $0.25 per share at any time prior to January 7, 2010. Every three months after June 26, 2003 the exercise price of the Series H warrants will be adjusted to an amount equal to 110% of the Conversion Price on such date, provided that the adjusted price is lower than the warrant exercise price on that date. If CEL-SCI sells any additional shares of common stock, or any securities convertible into common stock at a price below the then applicable exercise price of the Series H warrants, the exercise price of the Series H warrants will be lowered to the price at which the shares were sold or the lowest price at which the securities are convertible. If the exercise price of the Series H warrants is adjusted, the number of shares of common stock issuable upon the exercise of the Series H warrants will be increased by the product of the number of shares of common stock issuable upon the exercise of the warrant immediately prior to the sale multiplied by the percentage by which the warrant exercise price is reduced. If CEL-SCI sells any additional shares of common stock, or any securities convertible into common stock at a price below the market price of CEL-SCI's common stock, the exercise price of the Series H warrants will be lowered by a percentage equal to the price at which the shares were sold or the lowest price at which the securities are convertible, divided by the then prevailing market price of CEL-SCI's common stock. If the exercise price of the Series H warrants is adjusted, the number of shares of common stock issuable upon the exercise of the warrants will be increased by the product of the number of shares of common stock issuable upon the exercise of the warrant immediately prior to the sale multiplied by the percentage determined by dividing the price at which the shares were sold by the market price of CEL-SCI's common stock on the date of sale. However, neither the exercise price nor the shares issuable upon the exercise of the Series H warrants will be adjusted as the result of shares issued in connection with a Permitted Financing. As of September 15, 2003 Series H notes in the principal amount of $1,050,000 had been converted into 2,637,415 shares of CEL-SCI's common stock. Series I Warrants In May 2003 CEL-SCI sold shares of its common stock plus Series I warrants to a private investor. The Series I warrants allow the holders to purchase 1,100,000 shares of CEL-SCI's common stock at a price of $0.47 per share at any time prior to May 30, 2006. The shares issuable upon the exercise of the Series I warrants, as well as 1,100,000 shares of CEL-SCI's common stock which are owned by the holder of the Series I warrants, are being offered for sale by means of this prospectus. See "Selling Shareholders". Transfer Agent Computershare Trust Co., Inc., of Denver, Colorado, is the transfer agent for CEL-SCI's common stock. EXPERTS The consolidated financial statements of CEL-SCI Corporation as of September 30, 2002 and 2001, and for each of the three years in the period ended September 30, 2002 incorporated by reference in this prospectus from CEL-SCI's Annual Report on Form 10-K for the year ended September 30, 2002, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. INDEMNIFICATION CEL-SCI's bylaws authorize indemnification of a director, officer, employee or agent of CEL-SCI against expenses incurred by him in connection with any action, suit, or proceeding to which he is named a party by reason of his having acted or served in such capacity, except for liabilities arising from his own misconduct or negligence in performance of his duty. In addition, even a director, officer, employee, or agent of CEL-SCI who was found liable for misconduct or negligence in the performance of his duty may obtain such indemnification if, in view of all the circumstances in the case, a court of competent jurisdiction determines such person is fairly and reasonably entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling CEL-SCI pursuant to the foregoing provisions, CEL-SCI has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is therefore unenforceable. ADDITIONAL INFORMATION CEL-SCI is subject to the requirements of the Securities Exchange Act of l934 and is required to file reports, proxy statements and other information with the Securities and Exchange Commission. Copies of any such reports, proxy statements and other information filed by CEL-SCI can be read and copied at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding CEL-SCI. The address of that site is http://www.sec.gov. CEL-SCI will provide, without charge, to each person to whom a copy of this prospectus is delivered, including any beneficial owner, upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference below (other than exhibits to these documents, unless the exhibits are specifically incorporated by reference into this prospectus). Requests should be directed to: CEL-SCI Corporation 8229 Boone Blvd., #802 Vienna, Virginia 22182 (703) 506-9460 The following documents filed with the Commission by CEL-SCI (Commission File No. 0-11503) are incorporated by reference into this prospectus: o CEL-SCI's Annual Report on Form 10-K for the fiscal year ended September 30, 2002, o CEL-SCI's Quarterly Reports (unaudited) on Form 10-Q for the quarters ended December 31, 2002, March 31, 2003 and June 30, 2003, and o CEL-SCI's Proxy Statement relating to its March 31, 2003 shareholders' meeting. All documents filed with the Securities and Exchange Commission by CEL-SCI pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference into this prospectus and to be a part of this prospectus from the date of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for the purposes of this prospectus to the extent that a statement contained in this prospectus or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. CEL-SCI has filed with the Securities and Exchange Commission a Registration Statement under the Securities Act of l933, as amended, with respect to the securities offered by this prospectus. This prospectus does not contain all of the information set forth in the Registration Statement. For further information with respect to CEL-SCI and such securities, reference is made to the Registration Statement and to the exhibits filed with the Registration Statement. Statements contained in this prospectus as to the contents of any contract or other documents are summaries which are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. The Registration Statement and related exhibits may also be examined at the Commission's internet site. No dealer salesman or other person has been authorized to give any information or to make any representations, other than those contained in this prospectus. Any information or representation not contained in this prospectus must not be relied upon as having been authorized by CEL-SCI. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, the securities offered hereby in any state or other jurisdiction to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has been no change in the affairs of CEL-SCI since the date of this prospectus. TABLE OF CONTENTS Page Prospectus Summary..................................... Risk Factors........................................... Comparative Share Data................................. Selling Shareholders................................... Description of Securities.............................. Experts................................................ Indemnification........................................ Additional Information................................. Common stock CEL-SCI CORPORATION PROSPECTUS PART II Information Not Required in Prospectus Item 14. Other Expenses of Issuance and Distribution SEC Filing Fee $ 920 Blue Sky Fees and Expenses 100 Printing and Engraving Expenses 2,000 Legal Fees and Expenses 20,000 Accounting Fees and Expenses 10,000 Miscellaneous Expenses 1,980 -------- TOTAL $35,000 ======= All expenses other than the SEC filing fees are estimated. Item 15. Indemnification of Officers and Directors. ----------------------------------------- It is provided by Section 7-109-102 of the Colorado Revised Statutes and CEL-SCI's Bylaws that CEL-SCI may indemnify any and all of its officers, directors, employees or agents or former officers, directors, employees or agents, against expenses actually and necessarily incurred by them, in connection with the defense of any legal proceeding or threatened legal proceeding, except as to matters in which such persons shall be determined to not have acted in good faith and in the best interest of CEL-SCI. Item 16. Exhibits 3(a) Articles of Incorporation Incorporated by reference to Exhibit 3(a) of CEL-SCI's combined Registration Statement on Form S-1 and Post-Effective Amendment ("Registration Statement"), Registration Nos. 2-85547-D and 33-7531. (b) Amended Articles Incorporated by reference to Exhibit 3(a) of CEL-SCI's Registration Statement on Form S-1, Registration Nos. 2-85547-D and 33-7531. (c) Amended Articles (Name Filed as Exhibit 3(c) to CEL-SCI's warrants Registration Statement on Form S-1 Registration Statement (No. 33-34878). (d) Bylaws Incorporated by reference to Exhibit 3(b) of CEL-SCI's Registration Statement on Form S-1, Registration Nos. 2-85547-D and 33-7531. (a) Specimen copy of Incorporated by reference to Exhibit Stock Certificate 4(a) of CEL-SCI's Registration Statement on Form S-1 Registration Nos. 2-85547-D and 33-7531. (b) Designation of Series E Incorporated by reference to Exhibit 4 Preferred Stock to report on Form 8-K dated August 21, 2001. 5. Opinion of Counsel 10(d) Employment Agreement with Incorporated by reference to Exhibit Maximilian de Clara 10(d) to the Company's Registration Statement on Form S-1 (Commission File #333-102639). 10(e) Employment Agreement with _______________________________ Geert Kersten 10(q) Common Stock Purchase Agreement Incorporated by reference to Exhibit with Paul Revere Capital 10(q) to CEL-SCI Registration Statement Partners Ltd. on Form S-1 (Commission File Number 333-59798). 10(r) Stock Purchase Warrant issued to Incorporated by reference to Exhibit Paul Revere Capital Partners Ltd. 10(r) to CEL-SCI Registration Statement on Form S-1 (Commission File Number 333-59798). 10(s) Securities Exchange Agreement Incorporated by reference to Exhibit (together with Schedule 10.1 to report on Form 8-K dated August required by Instruction 2 to 21, 2001. Item 601 Regulation S-K) 10(t) Form of Series E Warrant Incorporated by reference to Exhibit 10.2 to report on Form 8-K dated August 21, 2001. 10(u) Form of Secondary Warrant Incorporated by reference to Exhibit 10.3 to report on Form 8-K dated August 21, 2001. 10(v) Note and Warrant Purchase Incorporated by reference to Exhibit Agreement (together with 10(v) to CEL-SCI's Registration Schedule required by Statement on Form S-3 (Commission File Instruction 2 to Item 601 Number 333-76396) Regulation S-K) pertaining to notes sold in December 2001 and January 2002 10(vi)Note and Warrant Purchase Incorporated by reference to Exhibit Agreement (together with (vi) to CEL-SCI's Registration statement Schedule required by on Form S-3 (Commission File No. 333- Instruction 2 to Item 601 97171) Regulation S-K) pertaining to Series G notes and warrants 10(vii)Note and Warrant Purchase Incorporated by reference to Exhibit 10 Agreement (together with to CEL-SCI's report on Form 8-K dated Schedule required by January 14, 2003 Instruction 2 to Item 601 Regulation S-K) pertaining to Series H notes and warrants 23(a) Consent of Hart & Trinen (b) Consent of Deloitte & Touche, LLP Item 17. Undertakings. ------------ The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement. (i) To include any prospectus required by Section l0(a)(3) of the Securities Act of l933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement, including (but not limited to) any addition or deletion of a managing underwriter. (2) That, for the purpose of determining any liability under the Securities Act of l933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Insofar as indemnification for liabilities arising under the Securities Act of l933 may be permitted to directors, officers and controlling persons of the Registrant, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. POWER OF ATTORNEY The registrant and each person whose signature appears below hereby authorizes the agent for service named in this Registration Statement, with full power to act alone, to file one or more amendments (including post-effective amendments) to this Registration Statement, which amendments may make such changes in this Registration Statement as such agent for service deems appropriate, and the Registrant and each such person hereby appoints such agent for service as attorney-in-fact, with full power to act alone, to execute in the name and in behalf of the Registrant and any such person, individually and in each capacity stated below, any such amendments to this Registration Statement. SIGNATURES Pursuant to the requirements of the Securities Act of l933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3/A and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vienna, Commonwealth of Virginia, on the 11th day of September 2003. CEL-SCI CORPORATION By:/s/ Maximilian de Clara ------------------------------ Maximilian de Clara, President Pursuant to the requirements of the Securities Act of l933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Maximilian de Clara Director and Principal September 11, 2003 - ------------------------ Executive Officer Maximilian de Clara /s/ Geert R. Kersten Director, Principal September 11, 2003 - ------------------------ Financial Officer Geert R. Kersten and Chief Executive Officer /s/ Alexander G. Esterhazy Director September 22, 2002 - ------------------------ Alexander G. Esterhazy /s/ C. Richard Kinsolving Director September 11, 2003 - ------------------------ C. Richard Kinsolving, Ph.D. /s/ Peter R. Young Director September 16, 2003 - ------------------------ Peter R. Young CEL-SCI CORPORATION REGISTRATION STATEMENT ON FORM S-3 EXHIBITS EX-5 3 septamnds3ex5.txt EXHIBIT 5 September 23, 2003 CEL-SCI Corporation 8229 Boone Blvd., #802 Vienna, Virginia 22182 This letter will constitute an opinion upon the legality of the sale by a selling shareholder of CEL-SCI Corporation, a Colorado corporation ("CEL-SCI"), of up to 2,247,831 shares of common stock, all as referred to in the Registration Statement on Form S-3 filed by CEL-SCI with the Securities and Exchange Commission. We have examined the Articles of Incorporation, the Bylaws and the minutes of the Board of Directors of CEL-SCI and the applicable laws of the State of Colorado, and a copy of the Registration Statement. In our opinion, CEL-SCI was authorized to issue the shares of stock mentioned above and such shares represent fully paid and non-assessable shares of CEL-SCI's common stock. Very truly yours, HART & TRINEN William T. Hart EX-10 4 septamnds3ex10e.txt EXHIBIT 10(E) EMPLOYMENT AGREEMENT EXHIBIT 10(e) EMPLOYMENT AGREEMENT This Employment Agreement ("AGREEMENT") is made by and between Geert R. Kersten, Esq. ("EMPLOYEE") and CEL-SCI Corporation ("CEL-SCI" or "the Company") as of September 1, 2003 (the "Effective Date"). RECITALS EMPLOYEE has been an EMPLOYEE of CEL-SCI since February 1987. CEL-SCI and EMPLOYEE wish to set forth in this AGREEMENT the terms and conditions under which EMPLOYEE is to be employed by CEL-SCI from the date of execution forward. EMPLOYEE and CEL-SCI entered into an Employment Agreement, dated as of October 31, 1991 (the "Original Employment Agreement"), and subsequently amended four times. The employment agreement currently is continuing on a month-to-month basis which is not satisfactory to both parties. Both parties wish to continue the employment relationship substantially consistent with the terms set forth in this Employment Agreement. The signing by both parties of this new AGREEMENT supersedes any of the old agreements and release both EMPLOYEE and CEL-SCI from any of the rights and obligations agreed to in any of the previous agreements. In consideration of EMPLOYEE's agreement to continue providing services to CEL-SCI, CEL-SCI's agreement to employ EMPLOYEE on the terms and conditions set forth herein and the mutual agreements set forth herein, the parties hereto agree as follows: 1. Term And Nature Of Employment CEL-SCI hereby employs EMPLOYEE as Chief Executive Officer of CEL-SCI for a three (3) year period commencing on the Effective Date of this AGREEMENT and ending on the third anniversary of the Effective Date, unless said period of employment (the "Employment Period") is terminated earlier in accordance with the terms of this AGREEMENT. EMPLOYEE hereby accepts such employment and agrees to devote his full business time and attention, best efforts, energy and skills to the business and affairs of CEL-SCI. EMPLOYEE agrees to perform such other duties as may from time to time be assigned to him by the Board of Directors of CEL-SCI and shall act at all times in accordance with the best interests of CEL-SCI. EMPLOYEE agrees that he shall comply with all applicable governmental laws, rules and regulations and with all of CEL-SCI's policies, rules and/or regulations applicable to the Employees of CEL-SCI. The employment relationship between CEL-SCI and EMPLOYEE may be terminated by CEL-SCI or by EMPLOYEE after the expiration of the 3-year period, with or without cause, subject to the terms and conditions of this AGREEMENT. 2. Wage Compensation 2.1 EMPLOYEE shall be compensated on the basis of an annualized salary of Dollars ($ 370,585), less applicable withholding taxes. Increases in salary, if any, shall be made at the sole discretion of the Board of Directors of CEL-SCI. Nothing in this paragraph 2.1 shall be construed to limit CEL-SCI's right to terminate this AGREEMENT in accordance with the terms hereof. 2.2 Payment. Salary payments will normally be made to EMPLOYEE semi-monthly or otherwise in accordance with CEL-SCI's pay period practices applicable to executive officers. 3. Other Benefits. 3.1 During the Employment Period, EMPLOYEE shall be entitled to receive any other benefits which are provided to CEL-SCI's executive officers or other full time Employees, in accordance with CEL-SCI's policies and practices and subject to EMPLOYEE's satisfaction of any applicable condition of eligibility. 3.2 Reimbursement of Expenses. CEL-SCI shall reimburse EMPLOYEE for all reasonable business expenses incurred by EMPLOYEE on behalf of CEL-SCI provided that: (i) such reasonable expenses are ordinary and necessary business expenses incurred on behalf of CEL-SCI, and (ii) EMPLOYEE provides CEL-SCI with itemized accounts, receipts and other documentation for such reasonable expenses as are reasonably required by CEL-SCI. Any expenses found not to be reasonable business expenses by the auditors or the IRS, will be reimbursed to the Company by the EMPLOYEE. EMPLOYEE has the right to fly Business Class if he chooses to do so. 4. Former Employment No Conflict. EMPLOYEE represents and warrants that the execution and delivery by him of this AGREEMENT, his employment by CEL-SCI and his performance of duties under this AGREEMENT will not conflict with and will not be constrained by any prior employment or consulting agreement or relationship, or any other contractual obligations. 5. Termination 5.1.a Termination of AGREEMENT Due to Death or Disability. EMPLOYEE's employment and this AGREEMENT shall terminate upon EMPLOYEE's death. In the event that EMPLOYEE's employment ends due to his death, CEL-SCI's obligations under this AGREEMENT shall immediately cease, except that the EMPLOYEE's legal representatives shall be entitled to receive all compensation otherwise payable to EMPLOYEE through the last day of the month in which the EMPLOYEE's death occurred. If EMPLOYEE dies while employed by CEL-SCI, any options or stock of the Company then owned by EMPLOYEE shall automatically accelerate and become fully vested. This provision shall not otherwise limit any benefits available under CEL-SCI's benefit plans. CEL-SCI shall also extend the period of exercisability of those stock options to four years, or the natural expiration of the stock options, whichever is earlier. 5.1.b. If EMPLOYEE becomes mentally or physically incapacitated or disabled so as to be unable to perform EMPLOYEE's duties under this agreement, the AGREEMENT shall terminate as well. Employee's inability to adequately perform services under this AGREEMENT for a period of ninety (90) consecutive days will be conclusive evidence of such mental or physical incapacity or disability, unless such inability to adequately perform such services under this AGREEMENT is pursuant to a mental or physical incapacity or disability covered by the Family Medical Leave Act ("FMLA"). If EMPLOYEE becomes disabled while employed by CEL-SCI, any options or stock of the Company then owned by EMPLOYEE shall automatically accelerate and become fully vested. This provision shall not otherwise limit any benefits available under CEL-SCI's benefit plans. CEL-SCI shall also extend the period of exercisability of those stock options to four years, or the natural expiration of the stock options, whichever is earlier. 5.2 "Termination for Cause". Notwithstanding anything to the contrary herein, EMPLOYEE's employment and this AGREEMENT may be terminated by CEL-SCI upon written notification upon the occurrence of any of the following: a. Willful misconduct that has a material adverse effect on CEL-SCI's operations, prospects, and business. b. Acts of fraud against CEL-SCI. c. EMPLOYEE breaches any of the terms or conditions set forth in this agreement within 30 days after EMPLOYEE's receipt from CEL-SCI of written notice of such breach, which notice shall describe in reasonable detail CEL-SCI's belief that EMPLOYEE is in breach hereof (notwithstanding the following, no cure period shall be applicable to breaches by EMPLOYEE of paragraphs 6 and 7 or to the extent CEL-SCI has provided EMPLOYEE more than 2 notices of substantially the same breach within any 12 month period). In the event that EMPLOYEE's employment is terminated with cause by CEL-SCI pursuant to this paragraph 5.2 of this AGREEMENT, CEL-SCI obligations under this AGREEMENT shall immediately cease. Termination of EMPLOYEE pursuant to this section 5.2 shall be in addition to and without prejudice to any other right or remedy to which CEL-SCI may be entitled at law, in equity, or under this AGREEMENT. 5.3 Involuntary Termination For Other Than Cause ("Constructive Termination"). "Constructive Termination" shall occur if EMPLOYEE resigns his employment within ninety (90) days of the occurrence of any of the following events: (i) any reduction in the salary of the EMPLOYEE, (ii) a relocation (or demand for relocation) of EMPLOYEE's place of employment to a location more than thirty-five (35) miles from EMPLOYEE's current place of employment, (iii) a significant and material reduction in EMPLOYEE's authority, job duties or level of responsibility or the imposition of significant and material limitations on EMPLOYEE's autonomy in his position, or (iv) if a Change of Control event has occurred. "Change of Control" shall mean a change in ownership or control of the Company effected through any of the following transactions: a. a merger, consolidation or reorganization approved by the Company's stockholders, unless securities representing more that 50% of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly, and in substantially the same proportion, by the persons who beneficially owned the company's outstanding voting securities immediately prior to such transaction, or b. any stockholder-approved transfer or other disposition of all or substantially all of the Company's assets, or c. the acquisition, directly or indirectly by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's shareholders, or d. a change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of Board members described in clause (A) who were still in office at the time the Board approved such election or nomination, or have been nominated for election as Members of the Board of Directors during such period by the President of the Company. In the event a Constructive Termination has occurred, other than Change of Control, EMPLOYEE shall, in his sole discretion, provide Company with his written notice of resignation to be effective not less than 30 days after receipt by Company, whereupon EMPLOYEE shall cease to be employed by the Company and both parties shall be relieved of further responsibility or liability to the other under this Agreement. In the case of Change of Control, EMPLOYEE does not have to submit his notice of resignation, as a simple notification will do. Upon receipt of such notice of resignation or notification, Company shall promptly pay to EMPLOYEE by certified check, wire transfer funds, or other form of payment reasonably acceptable to EMPLOYEE, a lump sum amount equal to the larger of twenty-four (24) months salary of the EMPLOYEE at such compensation rate as is then in effect under the terms of this Agreement, and any extension or renewal thereof (the "Payment"), or the value of the remaining employment contract. The Payment shall not have deducted from it any charges, expenses, debts, set-offs or other deductions of any kind whatsoever except for required taxes. In the event of a Constructive Termination, whether or not followed by termination of EMPLOYEE's employment, all stock options under any Company Stock Option Plan which EMPLOYEE holds at the time of such Change of Control, shall become fully vested. The company shall also extend the period of exercisability of those stock options to four years, or the natural expiration of the stock options, whichever is earlier. In the event of a Constructive Termination, CEL-SCI shall also provide the following benefits to EMPLOYEE: a. An eligible EMPLOYEE's existing coverage under the Company's group health plan (and, if applicable, the existing group health coverage for eligible dependents) will end on the last day of the month in which the eligible EMPLOYEE's employment terminates. The eligible EMPLOYEE and his eligible dependents may then be eligible to elect temporary continuation coverage under the Company's group health plan in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). The eligible EMPLOYEE (and, if applicable, his eligible dependents) will be provided with a COBRA election form and notice which describe his rights to continuation coverage under COBRA. If an eligible EMPLOYEE elects COBRA continuation coverage, then the Company will pay for COBRA coverage (such payments shall not include COBRA coverage with respect to the Company's Section 125 health care reimbursement plan) for (i) eighteen (18) months, or (ii) the maximum period permitted under COBRA. If EMPLOYEE does exhaust the applicable COBRA period, the Company will reimburse EMPLOYEE for the cost of an individual health insurance policy in an amount not to exceed the amount of the monthly COBRA premium previously paid by the Company pursuant to this paragraph for the remainder of the two year period following EMPLOYEE's termination of employment. After such period of Company-paid coverage, the eligible EMPLOYEE (and, if applicable, his eligible dependents) may continue coverage at his own expense in accordance with COBRA or other applicable laws. No provision of this agreement will affect the continuation coverage rules under COBRA. Therefore, the period during which the eligible EMPLOYEE must elect to continue the Company's health plan coverage under COBRA, the length of time during which COBRA coverage will be made available to the eligible EMPLOYEE, and all the eligible EMPLOYEE's other rights and obligation under COBRA will be applied in the same manner that such rules would apply in the absence of the Plan. In the event, however, an EMPLOYEE becomes eligible for benefits under another plan prior to the expiration of the period in which the Company is paying benefit premiums, the Company shall no longer be obligated to pay such benefit premiums. The EMPLOYEE is required to notify the Company of eligibility for benefits under another plan and is expected to enroll in the new group plan at the first eligible opportunity unless EMPLOYEE chooses, at EMPLOYEE's sole expense, to continue COBRA benefits through the Company. If EMPLOYEE fails to notify the Company of EMPLOYEE's eligibility for alterative benefits, the Company shall have the right to discontinue payment of COBRA premiums upon thirty (30) days notice to EMPLOYEE. In no event shall a cash payment be made to EMPLOYEE in lieu of the payment of COBRA premiums. The payment of COBRA premiums by the Company shall not extend the maximum eligible COBRA coverage period. b. Outplacement Services. The Company will make available to EMPLOYEE, upon his request, outplacement services provided by a reputable outplacement counselor selected by the Company for a period of nine months following termination. The Company will assume the cost of all such outplacement services. In no event will a cash payment be made in lieu of outplacement benefits. 6. Confidentiality 6.1 In view of the fact that the EMPLOYEE's work for the Company will bring him into close contact with many confidential affairs of the Company not readily available to the public, the EMPLOYEE agrees: 6.1.1 To keep secret and retain in the strictest confidence, all confidential matters of the Company, including, without limitation, inventions and related proprietary information, trade secrets, patents, customer lists, methods, scientific results and related documentation in connection with any research and development undertaken by, or at the direction of, the Company, confidential pricing policies, confidential utilization review protocols and screens, confidential and proprietary operational methods and other confidential and proprietary business affairs and plans of the Company and its affiliates, learned by him heretofore or hereafter; and not to disclose them to anyone outside the Company, except in the course of performing his duties hereunder or with the Company's express written consent; and 6.1.2 To promptly deliver to the Company upon the termination of his employment with the Company, or at any time the Company may so request, all memoranda, notes, records, reports, manuals, and other documents (and all copies thereof) relating to the Company's business and all property associated therewith, which he may then possess or have under his control. 6.2 If the EMPLOYEE commits a breach, or threatens to commit a breach, of any of the provisions of Section 5.1 hereof, the Company shall have the following rights and remedies: 6.2.1 The rights and remedy to have the provisions of this Agreement specifically enforced by any court of competent jurisdiction, it being acknowledged that any such breach or threatened breach shall cause irreparable injury to the Company, and that money damages shall not provide an adequate remedy to the Company; 6.2.2 The right and remedy to require the EMPLOYEE to reimburse the Company for all money damages, direct, consequential, or incidental, suffered by the Company as a result of any transactions constituting a breach of any of the provisions of the preceding paragraph. Each of the rights and remedies enumerated above shall be independent of the other and shall be severally enforceable, and all of such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity. 7. Non-Competition and Non-Solicitation of Employees EMPLOYEE agrees and promises that if his employment is terminated, then, for the period of time described below, he will not be engaged in any other business or as a consultant to or general partner, Employee, officer or director of any partnership, firm, corporation, or other entity, or as an agent for any person, or otherwise, if: (1) such other business, partnership, firm, corporation, entity or person is engaged in for-profit activity in the pharmaceutical industry within the United States and competes with CEL-SCI in the field of natural cytokine mixtures for the treatment of any cancer indication CEL-SCI is pursuing in clinical trials; and (2) EMPLOYEE either (a) is the President, Chief Executive Officer or Chairman of such other business, partnership, firm, corporation, entity or person; or (b) participates in or directs the development of drugs for the treatment of cancer for such other business, partnership, firm, corporation, entity or person. This agreement to refrain from engaging in competitive activities shall continue for the period during which CEL-SCI is required by the terms of paragraphs 5.2 or 5.3 of this AGREEMENT to make salary payments to EMPLOYEE following his termination (i.e., two (2) years in the case of termination under paragraph 5.2 or 5.3) or in the case of the EMPLOYEE's resignation for 2 years. The EMPLOYEE further agrees and represents that during the EMPLOYEE's employment by the Company and during the period in which EMPLOYEE is subject to the Non-Competition provisions of this AGREEMENT, the EMPLOYEE will not, directly or indirectly, on the EMPLOYEE's own behalf or in the service of, or on behalf of any other individual or entity, divert, or attempt to divert, solicit or hire away, to or for any individual or entity which is engaged in providing business services, any person employed by the Company, whether or not such EMPLOYEE is employed pursuant to a written agreement and whether or not such EMPLOYEE is employed for a determined period or at-will. 8. Notices. All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be in writing and shall be deemed to have been duly given if delivered personally or sent by prepaid electronic transmission or mailed first-class, postage prepaid, by registered or certified mail or delivered by an overnight courier service (notices sent by electronic transmission, mail or courier service shall be deemed to have been given on the date sent), as follows (or to such other address as either party shall designate by notice in writing to the other in accordance herewith): 9. Arbitration The parties agree that any and all disputes that they have with one another which arise out of EMPLOYEE's employment or under the terms of this AGREEMENT shall be resolved through final and binding arbitration, as specified herein. This shall include, without limitation, disputes relating to this AGREEMENT, EMPLOYEE's employment by CEL-SCI or the termination thereof, claims for breach of contract or breach of the covenant of good faith and fair dealing, and any claims of discrimination or other claims under any federal, state or local law or regulation now in existence or hereinafter enacted and as amended from time to time concerning in any way the subject of EMPLOYEE's employment with CEL-SCI or its termination. The only claims not covered by this paragraph 9 are claims for benefits under the workers' compensation laws or claims for unemployment insurance benefits, which will be resolved pursuant to those laws. Binding arbitration will be conducted in the Washington, D.C. metropolitan area, in accordance with the rules and regulations of the American Arbitration Association. Each party will bear one half of the cost of the arbitration filing and hearing fees, and the cost of the arbitrator. Each party will bear its own attorneys' fees, unless otherwise decided by the arbitrator. EMPLOYEE understands and agrees that the arbitration shall be instead of any civil litigation and that the arbitrator's decision shall be final and binding to the fullest extent permitted by law and enforceable by any court having jurisdiction thereof. 10. General. 10.1 This Agreement shall be governed by, and enforced in accordance with, the laws of the Commonwealth of Virginia. 10.2 The article and section headings in this Agreement are for reference only and shall not in any way affect the interpretation of this Employment Agreement. 10.3 This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof. 10.4 This Agreement, and the Employee's rights and obligations hereunder, may not be assigned by the Employee. The Company may assign this Agreement and its rights, together with its obligations, hereunder in connection with any sale, transfer or other disposition of all or substantially all of its business or assets subject to Section 5.3 hereof; in any event, the obligations of the Company hereunder shall be binding on its successors or assigns, whether by merger, consolidation of acquisition of all or substantially all of its business or assets. 10.5 This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms hereof may be waived, only by a written instrument executed by both of the parties hereto or, in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant in this Agreement. 11. Subsidiaries and Affiliates. As used herein, the term "subsidiary" shall mean any corporation or other business entity controlled by the corporation in question; and the term "affiliate" shall mean and include any corporation or other business entity controlling, controlled by, or under common control with the corporation in question. 12. Survival. Sections 6 and 7 of this Agreement shall survive termination of this Agreement for any reason. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CEL-SCI CORPORATION /s/ Geert Kersten ------------------------- By: Geert Kersten EMPLOYEE /s/ Geert R. Kersten ------------------------- Geert R. Kersten EX-23 5 septamnds3ex23a.txt EXHIBIT 23A CONSENT OF ATTORNEYS EXHIBIT 23(a) CONSENT OF ATTORNEYS Reference is made to the Registration Statement of CEL-SCI, whereby a selling shareholder proposes to sell up to 2,247,831 shares of CEL-SCI's common stock. Reference is also made to Exhibit 5 included in the Registration Statement relating to the validity of the securities proposed to be sold. We hereby consent to the use of our opinion concerning the validity of the securities proposed to be issued and sold. Very truly yours, HART & TRINEN William T. Hart Denver, Colorado September 23, 2003 EX-23 6 septamnds3ex23b.txt EXHIBIT 23B INDEPENDENT AUDITORS' CONSENT EXHIBIT 23(b) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement No. 333-106879 of CEL-SCI Corporation on Form S-3/A of our report dated December 23, 2002, appearing in the Annual Report on Form 10-K of CEL-SCI Corporation for the year ended September 30, 2002 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. Deloitte & Touche LLP McLean, Virginia September 23, 2003 -----END PRIVACY-ENHANCED MESSAGE-----