<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- - --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
T Cell Sciences, Inc.
(Name of Registrant as Specified In Its Charter)
T Cell Sciences, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
T CELL SCIENCES [LOGO]
T CELL SCIENCES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
The Annual Meeting of Stockholders of T Cell Sciences, Inc. will be held at
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts,
02110 on Thursday, May 18, 1995 at 10:00 A.M., for the following purposes:
1. To elect seven directors to serve until their successors are elected
and take office.
2. To transact any other business which may properly come before the
meeting.
Stockholders of record at the close of business on March 24, 1994 will be
entitled to notice of and to vote at the meeting. Stockholders who are unable to
attend the meeting in person are requested to complete, date and return the
enclosed form of proxy in the envelope provided. No postage is required if
mailed in the United States.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1994 is being mailed to you with this Notice and Proxy
Statement.
PAMELA A. HAY
Secretary
Needham, Massachusetts
April 6, 1995
YOUR VOTE IS IMPORTANT.
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES.
<PAGE> 3
T CELL SCIENCES, INC.
115 FOURTH AVENUE
NEEDHAM, MASSACHUSETTS 02194
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.001 per share, ("Common Stock") of T Cell Sciences, Inc. ("the Company") in
connection with the solicitation of proxies on behalf of the Board of Directors
of the Company for use at the Annual Meeting of Stockholders to be held on May
18, 1995, or at any adjournment thereof, pursuant to the accompanying Notice of
Annual Meeting of Stockholders. A form of proxy for use at the meeting and a
return envelope for the proxy are enclosed. Stockholders may revoke the
authority granted by their execution of proxies at any time before the proxies
are voted by filing with the Secretary of the Company a written revocation or
duly executed proxy, bearing a later date, or by voting in person at the
meeting.
The purpose of the meeting is to (i) elect seven directors to serve as the
Board of Directors for the ensuing year; and (ii) transact any other business
which may properly come before the meeting. The Company is not currently aware
of any other matters which will come before the meeting. If any other matters
properly come before the meeting, the persons designated as proxies intend to
vote in accordance with their best judgment on such matters. Shares represented
by executed and unrevoked proxies will be voted FOR the proposal shown on the
form of proxy unless otherwise indicated on the form of proxy. Directors are
elected by plurality of votes cast at the meeting.
Stockholders of record at the close of business on March 24, 1995 will be
entitled to vote at the meeting. The Company had issued and outstanding on March
10, 1995, 17,054,222 shares of Common Stock, each of which is entitled to one
vote upon each of the matters to be presented at the meeting. The presence of
holders of a majority of shares of Common Stock, whether in person or by proxy,
will constitute a quorum at the meeting. Abstentions and broker non-votes will
be counted for purposes of determining the presence or absence of a quorum.
Abstentions will have the effect of a negative vote and broker non-votes will
have no effect on determining whether a proposal has been approved.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. Forms of proxies will be mailed to stockholders with
the Proxy Statement on or about April 6, 1994. Proxies will be solicited chiefly
by mail, but additional solicitation may be made by telephone or telecopy by the
officers, regular employees or agents of the Company. All solicitation expenses,
including costs of preparing, assembling and mailing the proxy material, will be
borne by the Company.
Effective December 31, 1992, the Company changed its fiscal year from a
fiscal year ending April 30 to a fiscal year ending December 31. Accordingly,
the disclosures made in this Proxy Statement are for the twelve month fiscal
years ended December 31, 1994 and December 31, 1993, and the eight month fiscal
period ended December 31, 1992.
1
<PAGE> 4
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of March 10, 1995 regarding
Common Stock ownership by each person known by the Company to own beneficially
more than 5% of the Company's outstanding Common Stock, by each current director
and each nominee for director, by each current executive officer, and by all
current executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE OF
BENEFICIAL OWNERS OWNERSHIP(1) COMMON STOCK(2)
- - ------------------------------------------------------- -------------- -----------------
<S> <C> <C>
James D. Grant......................................... 301,000(4) 1.6%
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
Patrick C. Kung, Ph.D.................................. 797,800(5) 4.3%
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
Alan W. Tuck........................................... 313,500(6) 1.7%
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
John P. Munson......................................... 25,000(7) *
1 Heathlands Drive
Maidenhead
Berkshire SL6 4NF
ENGLAND
Thomas R. Ostermueller................................. 0 *
Melville Biologics, Inc.
155 Duryea Road
Melville, New York 11747
John Simon............................................. 156,107(8) *
Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Ronald M. Urvater...................................... 297,500(9) 1.6%
Capital Partners
919 Third Avenue,
19th Floor
New York, New York 10022
Duff Brace............................................. 1 *
T Cell Diagnostics, Inc.
6 Gill Street
Woburn, Massachusetts 01801
Una S. Ryan, Ph.D...................................... 41,250(3) *
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
All directors and officers as a group (consisting of 9
persons)............................................. 1,932,158 10.5%
</TABLE>
[FN]
- - ---------------
* Less than 1%.
(1) Unless otherwise indicated, the persons shown have sole voting and
investment power over the shares listed.
(2) Common Stock includes all outstanding Common Stock plus, as required for the
purpose of determining beneficial ownership (in accordance with Rule
13d-3(d)(1) of the Securities Exchange Act of 1934, as amended), all Common
Stock subject to any right of acquisition, through exercise or conversion of
any security, within 60 days of March 10, 1995.
2
<PAGE> 5
(3) Consists solely of shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 10, 1995.
(4) Includes 11,000 shares held by Mr. Grant's wife, as to which he disclaims
beneficial ownership, and 234,445 shares of Common Stock issuable upon
exercise of stock options, which are exercisable within 60 days of March
10, 1995.
(5) Includes 255,000 shares held by Dr. Kung's wife, as to which he disclaims
beneficial ownership, includes 173,000 shares held by a partnership of Dr.
Kung and his wife, includes 50,000 shares held by a trust for himself and
his family members, and includes 170,000 shares of Common Stock issuable
upon exercise of stock options which are exercisable within 60 days of
March 10, 1995. Excludes shares held by a trust for his minor children
which is administered by disinterested trustees, excludes shares held by a
custodian for his mother and excludes shares held by a charitable trust
established by Dr. Kung and his wife.
(6) Includes 1,000 shares of Common Stock held by trusts for Mr. Tuck's mother
and brother and for which Mr. Tuck holds voting power, includes 12,000
shares of Common Stock held jointly by Mr. Tuck and his wife, and includes
300,000 shares of Common Stock issuable upon exercise of stock options
which are exercisable within 60 days of March 10, 1995.
(7) Includes 10,000 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 10, 1995.
(8) Includes 40,000 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 10, 1995. Excludes
394,428 shares of Common Stock beneficially owned by Allen & Company
Incorporated as of March 10, 1995, as to which Mr. Simon disclaims
beneficial ownership.
(9) Includes 40,000 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 10, 1995.
PROPOSAL 1--ELECTION OF DIRECTORS
Seven directors, constituting the entire Board of Directors, are to be
elected at the meeting. The directors are elected by a plurality of the votes
cast at the meeting. Unless otherwise specified, the enclosed proxy will be
voted in favor of the nominees named below, all of whom are now directors of the
Company. In the event that a vacancy may occur during the year, such vacancy may
be filled by the Board of Directors for the remainder of the full term. All
nominees will be elected to serve until the next Annual Meeting of Stockholders
and until their successors are duly elected and qualified. In the event any of
these nominees shall be unable to serve as a director, the shares represented by
the proxy will be voted for the person, if any, who is designated by the Board
of Directors to replace the nominee. Each of the nominees has consented to be
nominated and to serve if elected. Mr. Thomas R. Ostermueller joined the Board
of Directors in May 1994 and is standing for election for the first time.
The nominees for the Board of Directors, their ages, the year in which each
first became a director and their principal occupations or employment during the
past five years are:
<TABLE>
<CAPTION>
YEAR
FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- -------- --------------------------
<S> <C> <C> <C>
James D. Grant(1) 62 1986 Chairman of the Board from November 1986
to date and Chief Executive Officer of the
Company from November 1986 to February
1992. Vice President, Scientific
Development of CPC International, Inc.
from 1973 to October 1986. From 1969 to
1972 Mr. Grant served as Deputy
Commissioner--U.S. Food and Drug Adminis-
tration and served as Vice Chairman of an
FDA Advisory Committee, the "Edwards
Commission". Director of Cangene Corp.
(Canada), Targeted Genetics Corp. (U.S.)
and the International Biotechnology Trust
(U.K.).
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
YEAR
FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- -------- --------------------------
<S> <C> <C> <C>
Patrick C. Kung, Ph.D(1) 47 1984 Vice Chairman of the Board of the Company
from February 1989 to date and Director
since February 1984. Scientific Director
from February 1984 to August 1992. Vice
President of Research for Centocor, Inc.
from 1981 to January 1984.
Alan W. Tuck(1) 46 1992 President and Chief Executive Officer of
the Company since February 1992 and
Director of T Cell Diagnostics, Inc.
Acting Chief Financial Officer of the
Company since September 1994. Mr. Tuck was
Vice President--Marketing and Business
Development of Biogen, Inc. from October
1987 to November 1991 and held various
positions at Bain & Company including
Manager from January 1984 to October 1987.
Served in various positions at Cummins
Engine Company from 1971 to 1984 including
General Manager--Parts Marketing. Director
of Genzyme Transgenics Corporation.
John P. Munson(3) 60 1992 Private investor since April 1992
retirement from positions of Senior Vice
President of Syntex Corporation and
President of Syntex Pharmaceuticals
International Ltd. Served in various
management capacities at Syntex since
1969.
Thomas R. Ostermueller(3) 46 1994 President and CEO, Melville Biologics,
Inc., a wholly-owned subsidiary of the New
York Blood Center since February 1995;
previously Chief Operating Officer,
Executive Vice President and member of the
Board of Trustees of the New York Blood
Center since February 1993. Executive Vice
President of the Mead Johnson Nutritional
Group, Bristol-Myers Squibb from 1990 to
1993 and Vice President of Bristol-Myers
from July 1988 until 1990.
John Simon(2) 52 1985 Executive Vice President and a Managing
Director of Allen & Company Incorporated,
a registered broker-dealer and investment
banking firm, for more than five years.
Director of Envirogen, Inc., Immune
Response Corporation, Lunn Industries,
Inc., Neurogen Corporation, and The Right
Start, Inc.
Ronald M. Urvater(1)(2) 52 1983 President, Capital Partners, a New York
based venture capital firm specializing in
organizing and financing start-up
companies, 1987 to date.
<FN>
- - ---------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
</TABLE>
The Board of Directors has an Audit Committee, a Compensation Committee and
an Executive Committee. The Board of Directors has no nominating committee. The
primary function of the Audit Committee is to review the scope and results of
the Company's annual audit, the fee charged by the Company's independent
accountants and matters relating to internal control procedures and systems. The
primary function of the Compensation Committee is to assist the Board in the
establishment of compensation for the Chief Executive Officer and, upon his
recommendation, to approve the compensation of other officers
4
<PAGE> 7
and senior employees and to approve certain other personnel and employee benefit
matters. The Executive Committee has the power to act on behalf of the Board,
except for certain powers excluded by the Company's By-Laws and the Delaware
General Corporation Law.
During the fiscal year ended December 31, 1994, the Board of Directors held
seven meetings, the Audit Committee held two meetings, the Compensation
Committee held three meetings and the Executive Committee held one meeting, and
each director attended at least 75% of the meetings held by the Board and Board
committee on which he served during the period he was a director.
DIRECTOR COMPENSATION
Directors who are not employees of the Company each receive a retainer fee
of $5,000 each fiscal year, except the Chairman of the Board who receives a
total fee of $30,000 and the Chairman of a Board committee who receives an
additional fee of $5,000. In addition, each member receives $1,000 for
attendance at any meeting of the Board of Directors and $500 for attendance at
any Board committee meeting. In addition, the Company's Amended and Restated
1991 Stock Compensation Plan provides for annual non-discretionary grants to
each non-employee director of a non-qualified stock option to purchase 5,000
shares of Common Stock with vesting after one year, a ten year term and an
exercise price equal to the fair market value of the Common Stock on the day of
grant. As of December 31, 1994, the current non-employee directors had the
following stock options outstanding: James D. Grant--239,445 (includes grants
made when an executive officer); John P. Munson--15,000; Thomas R.
Ostermueller--5,000; John Simon--45,000; and Ronald M. Urvater--45,000.
CERTAIN TRANSACTIONS WITH DIRECTORS
Mr. James D. Grant, an executive officer of the Company until November 1,
1992, is presently a consultant to the Company in the areas of government
affairs and regulation and special projects. The Company has a consulting
agreement with Mr. Grant which was renewed until November 1, 1995 and under
which he was paid $75,000 during 1994.
Management believes that the services provided by Mr. Grant have been
beneficial to the Company and on terms consistent with those offered by
nonaffiliated sources.
MANAGEMENT
EXECUTIVE OFFICERS
The following table lists the name, age, position and offices of all
current executive officers of the Company. Officers are elected annually by the
Board of Directors until their successors are duly elected and qualified.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AGE POSITION AND OFFICES
------------------ --- --------------------
<S> <C> <C>
Alan W. Tuck.................. 46 President & Chief Executive Officer
Patrick C. Kung, Ph.D......... 47 Vice Chairman of the Board
Una S. Ryan, Ph.D............. 53 Vice President, Research & Chief Scientific
Officer
Duff Brace.................... 52 President and Chief Operating Officer, T Cell
Diagnostics, Inc.
</TABLE>
For biographical summaries of Mr. Tuck and Dr. Kung, see "Election of
Directors."
Una S. Ryan, Ph.D. joined the Company as Vice President, Research and Chief
Scientific Officer in May 1993. She is also Research Professor of Medicine at
the Whitaker Cardiovascular Institute of the Boston University School of
Medicine. Dr. Ryan held the position of Director of Health Sciences at Monsanto
Co. from January 1990 to November 1992 and was Research Professor of Surgery,
Medicine and Cell Biology at Washington University School of Medicine from 1990
to 1993. From 1967 to 1990, Dr. Ryan was employed by the University of Miami as
Chief, Division of Vascular Cell Biology from 1986 to 1989 and as Professor of
Medicine from 1980 to 1989.
5
<PAGE> 8
Duff Brace joined T Cell Diagnostics, Inc., a wholly-owned subsidiary of T
Cell Sciences, in May 1994 as its President and Chief Operating Officer. He also
serves as Vice President of the Company. Since 1985, Mr. Brace was employed by
Miles Inc., where he most recently held the position of Senior Vice President,
Clinical Chemistry Business Unit. From 1969 to 1985, Mr. Brace held management
positions with Data Switch Corporation, Xonics, Inc., U.S. Surgical Corporation,
and General Electric Corporation.
SUMMARY COMPENSATION TABLE
The following table shows, for the twelve month fiscal years ended December
31, 1994 ("1994") and December 31, 1993 ("1993") and the eight month fiscal
period ended December 31, 1992 ("1992"), the cash compensation paid by the
Company, as well as other compensation paid or accrued for these fiscal years,
to the Chief Executive Officer and each of the current executive officers and
certain other persons who served as executive officers in 1994.
<TABLE>
- - -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
---------------------------------------------------------------------------
SECURITIES
UNDERLYING
OTHER ANNUAL STOCK ALL OTHER
SALARY BONUS(1) COMPENSATION OPTION COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan W. Tuck 1994 240,115 0 0 118,009(3) 1,500
President & 1993 223,558 60,361 0 100,000(3) 1,558
Chief Executive Officer 1992 145,385 29,400 0 -- 0
- - -----------------------------------------------------------------------------------------------------------------------
Patrick C. Kung, Ph.D. 1994 152,530 0 0 17,626(4) 587
Vice Chairman 1993 155,385 27,969 0 -- 877
1992 120,000 50,215 0 50,000(4) 689
- - -----------------------------------------------------------------------------------------------------------------------
Una S. Ryan, Ph.D. 1994 204,615 0 68,161(7) 25,345(8) 1,130
Vice President of Research 1993 134,615 24,231 23,354(7) 90,000(8) 0
& Chief Scientific Officer 1992 0 0 0 -- 0
- - -----------------------------------------------------------------------------------------------------------------------
Duff Brace 1994 106,615 0 14,784(7) 100,000(9) 90,000(9)
President & Chief 1993 0 0 0 -- 0
Operating Officer 1992 0 0 0 -- 0
T Cell Diagnostics, Inc.
- - -----------------------------------------------------------------------------------------------------------------------
Jacqueline D. Arthur 1994 119,202 0 0 508
Vice President & 1993 170,385 30,669 0 10,000(5) 587
Chief Financial Officer(5) 1992 74,152 12,502 0 75,000(5) 0
- - -----------------------------------------------------------------------------------------------------------------------
Alfred R. Rudolph, M.D. 1994 124,294 0 0 -- 615
Senior Vice President(6) 1993 180,000 32,400 0 15,000(6) 1,177
1992 103,846 40,038 0 25,000(6) 1,164
- - -----------------------------------------------------------------------------------------------------------------------
<FN>
(1) The bonus amounts in each fiscal year represent the payouts under the
Company's Performance Plan which were accrued for that fiscal year. No
payouts were made for the 1994 fiscal year. At the beginning of each fiscal
year the Compensation Committee sets performance goals to be met during the
fiscal year and at the end of the year determines the percentage of goals
achieved upon which bonus payouts are made. See "Report of the Compensation
Committee of the Board of Directors on Executive Compensation."
(2) Includes the Company's matching cash contribution to the 401(k) Savings Plan
of each named executive officer. Premiums paid for life insurance under the
Company's nondiscriminatory group plan are not included.
(3) On February 6, 1993 Mr. Tuck was granted an option to purchase 40,000 shares
at an exercise price of $6.125 with vesting in 1 year and on December 31,
1993 an option for 60,000 shares at an exercise price of $7.8125 with
vesting in 1 year. On December 9, 1994, he was granted an option to
purchase 50,000 shares at an exercise price of $2.75 with vesting in 1 year
and an option to purchase an additional 50,000 shares at the same price
with vesting in 5 years, to accelerate upon achievement of a specified
</TABLE>
6
<PAGE> 9
performance goal at the end of 1995. In addition, Mr. Tuck was granted an
option on December 30, 1994 to purchase 18,009 shares at a exercise price
of $2.50 with vesting in 1 year as part of an incentive grant to the
Company's employees. All options have a 10 year term.
(4) In connection with the renewals of his employment contract with the
Company, Dr. Kung was granted an option on August 1, 1992 to purchase
50,000 shares at an exercise price of $7.625 with vesting in equal
amounts over 2 years and a 7 year term, and an option on October 1, 1994,
to purchase 10,000 shares at an exercise price of $2.95 with vesting in
1 year and a 7 year term. In addition he was granted an option on
December 30, 1994 to purchase 7,626 shares at $2.50 with vesting in 1
year and a 10 year term as part of an incentive grant to the Company's
employees.
(5) Ms. Arthur resigned as the Company's Chief Financial Officer in September
1994. On July 31, 1992, Ms. Arthur was granted an option to purchase 75,000
shares at an exercise price of $7.75 with vesting over 4 years and on June
30, 1993, an option to purchase 10,000 shares at an exercise price of
$6.375 with vesting over 4 years. These options have expired, with no
shares exercised.
(6) Dr. Rudolph resigned from the Company effective August 1994. He was granted
an option to purchase 15,000 shares at an exercise price of $7.8125 on
December 31, 1993 and an option to purchase 25,000 shares at an exercise
price of $7.3125 on December 31, 1992, with both options vesting over 4
years. These options have expired, with no shares exercised.
(7) Amount represents payments made to Dr. Ryan and Mr. Brace or on their
behalf for relocation as part of their employment by the Company.
(8) In connection with her employment, Dr. Ryan was granted an option on March
31, 1993 to purchase 75,000 shares at an exercise price of $6.125 and on
December 31, 1993, she was granted an option to purchase 15,000 shares at
an exercise price of $7.8125, with each of these options vesting over 4
years. Dr. Ryan was granted an option to purchase 10,000 shares at an
exercise price of $3.5625 on June 30, 1994 and an option to purchase 4,000
shares at an exercise price of $2.50 on December 30, 1994, each with
vesting over 4 years. In addition, she was granted an option on December
30, 1994 to purchase 11,345 shares at an exercise price of $2.50 with
vesting in 1 year as part of an incentive grant to the Company's employees.
All options have a 10 year term.
(9) In connection with his employment, Mr. Brace was granted an option on May
31, 1994 to purchase 60,000 shares at an exercise price of $3.9375 with
vesting over 4 years and an option to purchase 40,000 shares at the same
exercise price with vesting in 5 years, to accelerate beginning in 1995
based on the achievement of certain specified quarterly performance goals.
Not included in the table, is a grant to Mr. Brace of an option to purchase
20,000 shares on January 1, 1995 at an exercise price of $2.50 with vesting
in 5 years, to accelerate beginning in 1996 based on the achievement of
certain specified quarterly performance goals. All these options have a 10
year term. Also in connection with his employment, Mr. Brace was given a
loan of $90,000 of which one-half the amount is forgivable on March 31,
1995 and the remainder on March 1, 1996, provided he remains an employee of
the Company as of those dates.
7
<PAGE> 10
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made during the
1994 fiscal year to each of the executive officers named in the Summary
Compensation Table above:
<TABLE>
- - -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- - -----------------------------------------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PER SHARE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR(1) ($/SH) DATE 5%($) 10%($)
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan W. Tuck 100,000 14.51% 2.75 12/09/04 172,946 438,279
18,009 2.61% 2.50 12/30/04 28,314 71,754
- - -----------------------------------------------------------------------------------------------------------------------------
Patrick C. Kung, Ph.D. 10,000 1.45% 2.975 10/01/01 12,111 28,224
7,626 1.11% 2.50 12/30/04 11,990 30,385
- - -----------------------------------------------------------------------------------------------------------------------------
Una S. Ryan, Ph.D. 10,000 1.45% 3.5625 06/30/04 22,404 56,777
4,000 0.58% 2.50 12/30/04 6,289 15,937
11,345 1.65% 2.50 12/30/04 17,837 45,203
- - -----------------------------------------------------------------------------------------------------------------------------
Duff Brace 60,000 8.71% 3.9375 05/31/04 148,576 376,522
40,000 5.80% 3.9375 05/31/04 99,051 251,014
- - -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) During 1994, a total of 689,184 options were granted to the Company's
employees, including to employees of the Company's subsidiary, T Cell
Diagnostics, Inc. The percentages were calculated as if those options
granted in 1994 which were subsequently canceled remained outstanding
as of the end of the 1994. For a description of each option grant, see
"Summary Compensation Table," footnote (3) for Mr. Tuck, footnote (4)
for Dr. Kung, footnote (8) for Dr. Ryan and footnote (9) for Mr. Brace.
No option grants were issued to Dr. Rudolph or Ms. Arthur during their
employment in 1994.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth, for each of the executive officers named in
the Summary Compensation Table above, the shares acquired and the value realized
in each exercise of stock options during the 1994 fiscal year and the fiscal
year end amount and value of unexercised options:
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT 12/31/94(#) AT 12/31/94(1)($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. Tuck -- -- 220,000 398,009 0 0
- - -----------------------------------------------------------------------------------------------------------------------------
Patrick C. Kung, Ph.D. -- -- 170,000 17,626 37,500 0
- - -----------------------------------------------------------------------------------------------------------------------------
Una S. Ryan, Ph.D. -- -- 22,500 92,845 0 0
- - -----------------------------------------------------------------------------------------------------------------------------
Duff Brace -- -- 0 100,000 0 0
- - -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based on the $2.50 per share closing price of the Company's Common
Stock on December 30, 1994.
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Tuck entered into an employment agreement with the Company on February
6, 1992 which, after an initial term of three years, is subject to automatic one
year extensions unless terminated by notice given at least 90 days prior to the
anniversary date by either Mr. Tuck or the Company. The first one year extension
is now in effect. The employment agreement provided for a base annual salary of
$210,000 plus merit increases and eligibility for an annual bonus of up to 20%
of his annual salary in accordance with the Company's Performance Plan. The
agreement also provided for the grant of stock options to purchase 400,000
shares of Common Stock, with 200,000 shares at a fair market value exercise
price of $12.375 vesting over 5 years and
8
<PAGE> 11
200,000 at an above-market value exercise price of $20.00 vesting over 5 years
as of February 6, 1994. In addition, the agreement provides for a severance
payment of not less than one year of the annual salary and bonus then in effect,
as well as the continuation of health insurance benefits, in the event of
termination by Mr. Tuck for good reason or by the Company other than for cause.
"Good reason" generally means the failure of Mr. Tuck to be nominated or elected
to the Company's Board of Directors or his present position, or a material
change in his authority or responsibilities, or a change of control, which
includes the acquisition or merger of a certain percentage of the Company's
Common Stock. "Cause" generally means willful or gross misconduct. Mr. Tuck's
employment agreement was amended in 1994 to provide for an eligibility for an
annual bonus of up to 30% of his annual salary.
Dr. Kung's employment agreement with the Company, was extended on October
1, 1994 for an additional year. Under the new agreement, Dr. Kung is to devote a
minimum of thirty hours per week to the Company for an annual salary of
$112,500. Dr. Kung was also granted a stock option to purchase 10,000 shares.
See "Summary Compensation Table," footnote(4).
Dr. Ryan and Mr. Brace each have an agreement with the Company under which
each is eligible for a severance payment of one year's base salary, continuation
of health insurance benefits and 100% vesting of all stock option grants in the
event of his or her termination following a change of control. "Change of
control", as defined in the Company's stock plan, is the acquisition or merger
of a certain percentage of the Company's stock or the election of a certain
percentage of directors not nominated by the Board, provided the Board of
Directors has adopted a resolution that such a change of control has occurred.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee of the Board of Directors was composed of three
non-employee directors, Messrs. Robert Rice, John Simon and Ronald M. Urvater
until May 12, 1994 when Mr. Rice retired from the Board, and of the remaining
two members since that date. None of these Compensation Committee members has
been an officer or employee of the Company.
No Compensation Committee interlocks between the Company and another entity
exist.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") is comprised entirely of non-employee directors. The Committee is
responsible for establishing and administering the policies governing the
compensation of the Company's employees, including salary, bonus and stock
option grants. In general, the policy of the Committee is to compensate the
Company's employees with competitive salaries based on their level of experience
and job performance. All permanent employees of the Company, including executive
officers, are eligible for annual bonus awards based on achievement of the
Company's strategic corporate goals, and participate in the Company's stock
option program. The bonus awards and stock option grants are awarded by the
Compensation Committee in accordance with the Company's Performance Plan and
Amended and Restated 1991 Stock Compensation Plan. The Committee is also
responsible for the administration of the Company's 1994 Employee Stock Purchase
Plan, in which employees participate on a voluntary basis.
In order to both attract and retain experienced and qualified executives to
manage the Company, the Committee has established an executive compensation
policy under which executives are (i) paid salaries which are competitive with
the salaries of executives in comparable positions in the biotechnology
industry, and (ii) eligible for additional compensation upon achievement of
corporate goals under the bonus Performance Plan and through stock price
appreciation of shares vested to them from stock options granted at fair market
value. This policy is designed to have a significant portion of each executive's
total compensation be at risk based upon the Company's performance and,
therefore, the price of the Common Stock, thus providing executives with
incentive to build value for both the Company and its stockholders. Section
162(m) of the Internal Revenue Code of 1986, as amended, limits the
deductibility on the Company's tax return of compensation over $1 million to any
of the executive officers named in the Company's Proxy Statement, unless, in
general, the compensation is paid pursuant to a plan which is
performance-related, non-discretionary
9
<PAGE> 12
and has been approved by the Company's stockholders. The Committee's policy with
respect to Section 162(m) is to make every reasonable effort to ensure that
compensation is deductible while also providing executives with appropriate
rewards for their performance.
Each executive officer (except the Chief Executive Officer whose
performance is reviewed by the Committee) has an annual formal performance
review with the Chief Executive Officer who then makes recommendations on salary
increases, promotions and stock option grants to the Compensation Committee. The
salary increases are then approved based on the average salary increases
expected in the biotechnology industry and the Boston area, with the salaries in
1994 either at or slightly above the average of the salaries paid to persons in
comparable positions based on an independently prepared 1994 employee
compensation survey of approximately 260 biotechnology companies. In 1994, the
stock option awards for the executive officers other than the Chief Executive
Officer included option grants made upon hire and on an annual basis, with the
number of underlying shares consistent with the stock option grant practices of
other companies in the biotechnology industry.
The bonus award is based on the percentage of achievement of the Company's
strategic goals which are set at the beginning of each fiscal year and measured
against performance at the end of the year by the Committee in accordance with
the Company's Performance Plan. All permanent employees of the company
participate in the bonus plan and are eligible to receive a bonus of up to a
percentage of base salary, determined by their salary grade level. For the 1994
fiscal year, two sets of goals were applicable to all employees, including the
executive officers: One set of overall corporate goals and, depending on whether
the employee works in the therapeutic or diagnostic areas, a second set of goals
applicable to the therapeutic or diagnostic programs. Both sets of goals were
evenly allocated between product, organization and financial achievements. The
Compensation Committee determined that due to delays (some of which were outside
the control of the employees) in achievement of most of the goals, no cash
payout would be made for 1994. However, as an incentive to the Company's
employees who were eligible to receive bonus awards, on December 31, 1994 the
Committee awarded the employees stock option grants with vesting in one year and
the number of shares determined by a formula based on bonus level eligibility.
Mr. Alan Tuck, the Company's President and Chief Executive Officer,
received a salary increase of approximately 7% effective at the beginning of
1994. The salary increase was made after a performance review of the
accomplishments made during 1993 and after an analysis of the average increases
being made within the Company and the salaries of persons in similar positions
in the industry. Mr. Tuck's base salary for 1994 was below the average of the
base salaries paid to other Chief Executive Officers in similar sized companies
in the biotechnology industry, based on the previously referenced 1994 employee
compensation survey. Although Mr. Tuck, was eligible for a bonus of 30% of base
salary under the performance plan, as previously mentioned, no payouts were made
for 1994.
Mr. Tuck was granted on December 9, 1994 two separate stock options to
purchase 50,000 shares each at an exercise price of $2.75 per share. One of
these options vests in one year and the other provides for an accelerated
vesting upon the achievement of a specific financial statement goal by December
31, 1995. The Committee determined that this grant was in order given Mr. Tuck's
accomplishments in relocating the Company's facilities on an expedited basis due
to an air quality problem at its former headquarters, advancing the therapeutic
and diagnostic product candidates, and taking on the additional responsibilities
of executive officers who left the Company in 1994. In addition, on December 30,
1994 Mr. Tuck received a stock option grant for 18,009 shares at a purchase
price of $2.50 with vesting in one year. This award was his allocation (based on
his eligibility level under the Performance Plan) in the special year end
incentive grant to all employees.
COMPENSATION COMMITTEE
RONALD M. URVATER, Chairman
JOHN SIMON
10
<PAGE> 13
STOCK PERFORMANCE GRAPH
The graph below represents a comparison of the cumulative shareholder
return on the Common Stock for the Company's last five fiscal years, including
the fiscal year ended December 31, 1994, with the cumulative total stockholder
return of the NASDAQ Stock Market (U.S.) Index and NASDAQ Pharmaceutical Stock
Index (which is made up of companies quoted on the NASDAQ National Market System
whose Primary Industrial Classification Code is 283, Pharmaceutical Companies).
The graph assumes an investment of $100 on April 30, 1990 in the Company's
Common Stock and in the two indexes.
<TABLE>
<CAPTION>
NASDAQ
NASDAQ Stock Pharmaceuti-
Measurement Period T Cell Sci- Market (U.S.) cal Stock In-
(Fiscal Year Covered) ences, Inc. Index dex
<S> <C> <C> <C>
4/30/90 100 100 100
4/30/91 173 119 189
4/30/92 183 144 231
12/31/92 197 170 266
12/31/93 207 194 237
12/30/94 67 189 179
</TABLE>
INDEPENDENT ACCOUNTANTS
On February 10, 1994, the Board of Directors of the Company approved the
engagement of the firm Price Waterhouse as its independent accountants replacing
KPMG Peat Marwick. The Company expects that a representative from Price
Waterhouse will be present at the Annual Meeting to respond to appropriate
questions.
The reports of KPMG Peat Marwick on the Company's financial statements for
the eight month fiscal period ended December 31, 1992 and the twelve month
fiscal year ended December 31, 1993, respectively, did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified in any
way. In connection with the audits of the Company's financial statements for
each of those two years and in the period of the fiscal year which ended
December 31, 1994 prior to the termination of the engagement of KPMG Peat
Marwick, there were no disagreements with KPMG Peat Marwick on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure which, if not resolved to the satisfaction of KPMG Peat
Marwick, would have caused KPMG Peat Marwick to make reference to the matter in
connection with its reports on the Company's financial statements with respect
to such periods. Also, during the Company's two most recent years, there were no
"reportable events" as defined in subparagraph (a)(1)(v) of Item 304 of
Regulation S-K. During the Company's fiscal years ended December 31, 1992 and
December 31, 1993 and in the subsequent interim period prior to the engagement
of Price Waterhouse, neither the Company nor anyone else on its behalf consulted
Price Waterhouse regarding either (i)
11
<PAGE> 14
application of accounting principles to a specified transaction, either
completed or proposed or (ii) the type of audit opinion that might be rendered
on the Company's financial statements.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
In accordance with the Company's Amended and Restated By-Laws as of
November 10, 1994, all stockholder proposals and nominations which are requested
to be presented at the 1996 Annual Meeting of Stockholders of the Company must
be received by the Company at its offices, attention: Secretary, no later than
March 4, 1996 and no earlier than January 19, 1996 for inclusion in the
Company's proxy statement and form of proxy relating to the meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting, it is
the intention of persons named in the enclosed proxy to vote on such matters in
accordance with their best judgment.
The prompt return of the proxy will be appreciated and helpful in obtaining
the necessary vote. Therefore, whether or not you expect to attend the meeting,
please sign the proxy and return it in the enclosed envelope.
By order of the Board of Directors
PAMELA A. HAY
Secretary
Dated: April 6, 1995
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM T CELL SCIENCES,
INC., ATTENTION: CORPORATE COMMUNICATIONS, 115 FOURTH AVENUE, NEEDHAM,
MASSACHUSETTS 02194.
12
<PAGE> 15
T CELL SCIENCES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1995
The undersigned hereby appoints James D. Grant, Patrick C. Kung, and Alan W.
Tuck, and each of them, as the true and lawful attorneys, agents, and proxies
of the undersigned, with full power of substitution, and hereby authorizes them
to represent and to vote, as designated on the reverse, all shares of Common
Stock held of record by the undersigned on March 24, 1995, at the Annual
Meeting of Stockholders to be held at 10:00 A.M. on May 18, 1995 at the State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, or at any adjournment thereof. Any and all proxies heretofore given are
hereby revoked. Unless you specify otherwise, or make no specification, the
proxies will be voting FOR all nominees listed in Item 1 and otherwise in
accordance with the best judgment of the holder thereof.
- - --------------------------------------------------------------------------------
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY
IN ENCLOSED ENVELOPE.
- - --------------------------------------------------------------------------------
Please sign this proxy exactly as your name appears on the books of the
Corporation. Joint owners are to each sign personally. Trustees and other
fiduciaries are to indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, the signature is
that of an authorized officer who should state his or her title.
- - --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
<PAGE> 16
<TABLE>
<S> <C>
/ X / PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITH- FOR ALL
FOR HOLD EXCEPT
1. Election of Directors. / / / / / / T CELL SCIENCES, INC.
JAMES D. GRANT, PATRICK C. KUNG, ALAN W. TUCK,
JOHN P. MUNSON, THOMAS R. OSTERMUELLER,
JOHN SIMON, RONALD M. URVATER
INSTRUCTIONS: To withhold authority to vote for any
Individual nominee, mark the "For All Except" box and strike
a line through the nominees name:
RECORD DATE SHARES:
-----------------
Please be sure to sign and date this Proxy. Date Mark box at right if comments or address change / /
- - --------------------------------------------------------------------- have been noted on the reverse side of this card.
- - --------Stockholder sign here-------------Co-owner sign here---------
DETACH CARD
</TABLE>
T CELL SCIENCES, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your stock.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, May 18,
1995.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
T Cell Sciences, Inc.
