<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
[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
Fleet Bank, Room FG, 75 State Street, Boston, Massachusetts, 02109 on Tuesday,
May 21, 1996 at 2:00 P.M., for the following purposes:
1. To elect six 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 29, 1996 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, 1995 is being mailed to you with this Notice and Proxy
Statement.
PAMELA A. HAY
Secretary
Needham, Massachusetts
April 12, 1996
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
21, 1996, 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 six 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 29, 1996 will be
entitled to vote at the meeting. The Company had issued and outstanding on March
15, 1996, 19,896,804 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 12, 1996. 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.
1
<PAGE> 4
BENEFICIAL OWNERSHIP OF COMMON STOCK
<TABLE>
The following table sets forth information as of March 15, 1996 regarding
Common Stock ownership by all persons known by the Company to own beneficially
more than 5% of the Company's outstanding Common Stock, by all directors and
nominees for director, by all named and current executive officers, and by all
directors and executive officers as a group.
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENTAGE OF
OF BENEFICIAL OWNERS OWNERSHIP(1) COMMON STOCK(2)
- ------------------------------------- -------------- -----------------
<S> <C> <C>
James D. Grant......................................... 311,000(4) 1.6%
860 Fifth Avenue
New York, NY 10021
Patrick C. Kung, Ph.D.................................. 753,960(5) 3.8%
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
Alan W. Tuck........................................... 512,009(6) 2.6%
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
John P. Munson......................................... 30,000(7) *
1 Heathlands Drive
Maidenhead
Berkshire SL6 4NF
ENGLAND
Thomas R. Ostermueller................................. 5,000(3) *
Melville Biologics, Inc.
155 Duryea Road
Melville, New York 11747
John Simon............................................. 161,107(8) *
Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Duff Brace............................................. 15,000(3) *
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
Una S. Ryan, Ph.D...................................... 70,088(3) *
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
James L. Levin, D.V.M.................................. 30,357(9) *
T Cell Sciences, Inc.
115 Fourth Avenue
Needham, Massachusetts 02194
All directors and officers as a group (consisting of 9
persons)............................................. 1,888,521 9.5%
<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 15, 1996.
(3) Consists solely of shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 15, 1996.
</TABLE>
2
<PAGE> 5
(4) Includes 11,000 shares held by Mr. Grant's wife, to which he disclaims
beneficial ownership, and 244,445 shares of Common Stock issuable upon
exercise of stock options, which are exercisable within 60 days of March 15,
1996.
(5) Includes 255,000 shares held by Dr. Kung's wife, to which he disclaims
beneficial ownership, 50,000 shares held by a trust for himself and his
family members, and 187,626 shares of Common Stock issuable upon exercise of
stock options which are exercisable within 60 days of March 15, 1996.
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 13,000
shares of Common Stock held jointly by Mr. Tuck and his wife, and includes
498,009 shares of Common Stock issuable upon exercise of stock options which
are exercisable within 60 days of March 15, 1996.
(7) Includes 15,000 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 15, 1996.
(8) Includes 45,000 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 15, 1996. Excludes
354,928 shares of Common Stock beneficially owned by Allen & Company
Incorporated as of March 15, 1996, to which Mr. Simon disclaims beneficial
ownership.
(9) Includes 29,857 shares of Common Stock issuable upon exercise of stock
options which are exercisable within 60 days of March 15, 1996.
PROPOSAL 1--ELECTION OF DIRECTORS
Six directors, constituting the entire Board of Directors, are to be
elected at the meeting. Each of the nominees listed below has consented to be
nominated and to serve if elected. 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.
The nominees for the Board of Directors, their ages, the year in which each
first became a director and their principal occupations during the past five
years are:
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
------- --- --------------- --------------------------
<S> <C> <C> <C>
James D. Grant(1) 63 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 Administration and served as
Vice Chairman of an FDA Advisory Committee,
the "Edwards Commission". Director of
Targeted Genetics Corp. (U.S.),
International Biotechnology Trust (U.K.),
and Biocompatibles, Ltd. (U.K.).
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
YEAR FIRST PRINCIPAL OCCUPATION
NOMINEE AGE BECAME DIRECTOR DURING THE PAST FIVE YEARS
------- --- --------------- --------------------------
<S> <C> <C> <C>
Patrick C. Kung, Ph.D.(1) 48 1984 Vice Chairman of the Board of the Company
from February 1989 to date and Director
since February 1984. Scientific Director of
the Company from February 1984 to August
1992. Since June 1994, President of Global
Pharma Ltd., a Bermuda limited liability
company, of which the Company holds a
minority interest. Vice President of
Research for Centocor, Inc. from 1981 to
January 1984.
Alan W. Tuck(1) 47 1992 President and Chief Executive Officer of
the Company since February 1992 and acting
Chief Financial Officer of the Company
since September 1994. President of T Cell
Diagnostics, Inc. since March 1996. 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) 61 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(2)(3) 47 1994 President and CEO, Melville Biologics, Inc.
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) 53 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 Immune Response Corporation,
Lunn Industries, Inc. and Neurogen
Corporation.
<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 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.
4
<PAGE> 7
During the fiscal year ended December 31, 1995, the Board of Directors held
ten meetings, the Audit Committee held four 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 are each entitled to receive
a retainer fee of $5,000 each fiscal year, except the Chairman of the Board who
receives a total fee of $30,000. Each Board committee Chairman is entitled to
receive an additional retainer fee of $5,000. In addition, each member is
entitled to receive $1,000 for attendance at any meeting of the Board of
Directors and $500 for attendance at any meeting of a Board committee. The
Company's Amended and Restated 1991 Stock Compensation Plan provides for annual
non-discretionary grants to each non-employee director of a 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, 1995, the current non-employee directors
had the following stock options outstanding: James D. Grant--244,445 (includes
grants made when an executive officer); John P. Munson--20,000; Thomas R.
Ostermueller--10,000; and John Simon--50,000.
CERTAIN TRANSACTIONS WITH DIRECTORS
Mr. James Grant, an executive officer of the Company until November 1,
1992, was a consultant to the Company in the areas of government affairs and
regulation and special projects until November 1, 1995, for which he was paid a
fee of approximately $42,000 during 1995. Dr. Patrick Kung, an employee of the
Company until December 31, 1995, is now a consultant to the Company under a
one-year consulting agreement, for which he is expected to be paid $30,000,
including services as an outside director. Mr. John Simon is a Managing Director
of Allen & Company Incorporated ("Allen & Company"). The Company entered into a
Placement Agency Agreement with Allen & Company in November 1995 under which
Allen & Company was paid a fee of $165,000 for the private placement of stock of
the Company with certain investors.
Management believes that the services provided by Mr. Grant, Dr. Kung and
Allen & Company were or will be 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.................. 47 President & Chief Executive Officer
Una S. Ryan, Ph.D. ........... 54 Vice President of Research & Chief Scientific
Officer
James L. Levin, D.V.M. ....... 41 Vice President of Development
</TABLE>
For a biographical summary of Mr. Tuck, see "Election of Directors."
Una S. Ryan, Ph.D. joined the Company as Vice President and Chief
Scientific Officer of Research 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, including most recently as Chief, Division of Vascular Cell Biology and
Professor of Medicine.
5
<PAGE> 8
James L. Levin, D.V.M. joined the Company as Director of Pharmaceutical
Evaluation in April 1992 and was promoted to Vice President of Development in
December 1995. Prior to joining the Company, he was Vice President, Technical
Operations for TSI Mason Laboratories in Worcester. He received a DVM from Tufts
University School of Veterinary Medicine and an MS in pharmacology from Tulane
University. Dr. Levin is also an Adjunct Assistant Professor in the Department
of Comparative Medicine at Tufts University School of Veterinary Medicine, as
well as a member of the Massachusetts Society for Medical Research.
SUMMARY COMPENSATION TABLE
<TABLE>
The following table shows, for the fiscal years ended December 31, 1995
("1995"), December 31, 1994 ("1994") and December 31, 1993 ("1993"), 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 person who
served as executive officers during 1995.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
-----------------------------------------------------------------------------
SECURITIES
UNDERLYING
OTHER ANNUAL STOCK ALL OTHER
SALARY BONUS(1) COMPENSATION OPTIONS COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan W. Tuck 1995 245,447 0 0 100,000(3) 1,471
President & 1994 240,115 0 0 100,000(3) 1,989
Chief Executive Officer 1993 223,558 60,361 0 100,000(3) 1,558
- ------------------------------------------------------------------------------------------------------------------------
Una S. Ryan, Ph.D. 1995 204,996 0 0 50,000(5) 1,155
Vice President of Research 1994 204,615 0 68,161(4) 25,345(5) 1,130
& Chief Scientific Officer 1993 134,615 26,923 23,354(4) 90,000(5) 0
- ------------------------------------------------------------------------------------------------------------------------
Duff Brace(6) 1995 170,499 0 0 20,000(6) 1,108
President & Chief 1994 106,615 0 14,784(4) 100,000(6) 90,000(6)
Operating Officer 1993 -- -- -- -- --
T Cell Diagnostics, Inc.
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The bonus amounts in each fiscal year represent the payouts under the
Company's Performance Plan, which were accrued for that year. No payouts
were made for the 1994 and 1995 fiscal years. At the beginning of each
fiscal year the Compensation Committee sets performance goals to be met
during the 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) Except as otherwise noted, consists of 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 and on December 31, 1993 an option for 60,000
shares at an exercise price of $7.8125, each 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 after 5 years, with
earlier vesting upon achievement of a specified performance goal at the end
of 1995. In addition, Mr. Tuck was granted an option on January 1, 1995 to
purchase 18,009 shares at an exercise price of $2.50 with vesting in 1 year
as part of a special incentive grant to the Company's employees, and was
granted an option on December 8, 1995 to purchase 81,991 shares at an
exercise price of $2.938, vesting over 4 years. All options have a 10 year
term.
(4) Amount represents payments made to Dr. Ryan and Duff Brace, or on their
behalf, for relocation as part of their employment by the Company.
</TABLE>
6
<PAGE> 9
(5) 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. She was
granted on December 31, 1993 an option to purchase 15,000 shares at an
exercise price of $7.8125; on June 30, 1994 an option to purchase 10,000
shares at an exercise price of $3.5625; and on December 30, 1994 an option
to purchase 4,000 shares at an exercise price of $2.50, each with vesting
over 4 years. 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 a special incentive grant to the Company's employees. On December 8,
1995, Dr. Ryan was granted an option to purchase 50,000 shares at an
exercise price of $2.938, vesting over 4 years. All options have a 10 year
term.
(6) Mr. Brace resigned as President and COO of T Cell Diagnostics, Inc. and as
Vice President of the Company effective March 1, 1996 in connection with the
Company's sale of the preclinical products business of T Cell Diagnostics,
Inc. As part of his employment, Mr. Brace was granted on May 31, 1994 an
option 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 after 5 years, subject to earlier vesting
beginning in 1995 based on the achievement of certain specified quarterly
performance goals. Mr. Brace also was granted an option to purchase 20,000
shares on January 1, 1995 at an exercise price of $2.50 with vesting after 5
years, subject to earlier vesting beginning in 1996 based on the achievement
of certain specified quarterly performance goals. All of these options have
a 10 year term. Mr. Brace was granted a loan of $90,000 forgivable over two
years.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
The following table sets forth each grant of stock options made during the
1995 fiscal year to each of the executive officers named in the Summary
Compensation Table above:
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- -------------------------------------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PER SHARE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) YEAR(1) ($/SH) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Alan W. Tuck 81,991 13.9% 2.938 12/08/05 151,494 383,916
18,009 3.0% 2.50 01/02/05 28,314 71,754
- -------------------------------------------------------------------------------------------------------------------------
Una S. Ryan, Ph.D. 50,000 8.5% 2.938 12/08/05 92,385 234,121
- -------------------------------------------------------------------------------------------------------------------------
Duff Brace 20,000 3.4% 2.50 01/01/05 31,445 79,687
- -------------------------------------------------------------------------------------------------------------------------
<FN>
(1) During 1995, a total of 590,523 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 1995 which were subsequently canceled remained outstanding
as of the end of the 1995. For a description of each option grant, see
"Summary Compensation Table," footnote (3) for Mr. Tuck, footnote (4)
for Dr. Ryan and footnote (5) for Mr. Brace.
</TABLE>
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
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 1995 fiscal year and the quantity
and value of unexercised options at the end of the year:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT 12/31/95(#) AT 12/31/95(1)($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan W. Tuck -- -- 600,000 100,000 43,800 32,889
- ---------------------------------------------------------------------------------------------------------------------------
Una S. Ryan, Ph.D. -- -- 51,338 114,007 2,640 20,148
- ---------------------------------------------------------------------------------------------------------------------------
Duff Brace -- -- 15,000 105,000 0 0
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based on the $3.188 per share closing price of the Company's Common
Stock on December 29, 1995.
</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 as amended provides for: an initial term of three years, 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; a base
annual salary of $210,000 plus merit increases; eligibility for an annual bonus
of up to 30% of his annual salary in accordance with the Company's Performance
Plan; and 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 200,000 at an above-market value exercise price of $20.00
vesting over 5 years beginning 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.
Dr. Ryan, Dr. Levin, 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 two
non-employee directors, Messrs. Ronald Urvater and John Simon during the first
half of 1995 and Messrs. Thomas Ostermueller and John Simon during the remainder
of the year. 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"), which is comprised of non-employee directors, is responsible for
establishing and administering the policies governing the compensation of the
Company's employees, including salary, bonus and stock option grants. 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
8
<PAGE> 11
eligible for annual bonus awards based on achievement of the Company's strategic
corporate goals, and participation in the Company's stock option program. The
bonus awards and stock option grants are made 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's policy on executive compensation is to (i)
pay salaries which are competitive with the salaries of executives in comparable
positions in the biotechnology industry, and (ii) allow 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 senior manager's total compensation be at risk based
upon the Company's progress, in order to provide the manager with incentive to
fully dedicate himself or herself to achievement of corporate goals, which in
turn should build value for the Company's stockholders.
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. The salaries of
these executive officers in 1995 were either at or slightly above the average of
the salaries paid to persons in comparable positions based on an independently
prepared 1995 employee compensation survey of approximately 256 biotechnology
companies. Due to financial constraints within the Company, no salary increases
for executive officers were made at the end of 1995.
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. For 1995, 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 allocated between specific product
and financial performance targets. The Compensation Committee determined that
due to delays in achieving most of the stated goals, no cash payout would be
made under the plan for 1995. In 1995, the stock option awards for the executive
officers other than the Chief Executive Officer consisted of grants made as part
of either commitments made at hiring or in conjunction with a review of the
executives' performance during the year. The number of underlying shares are
consistent with the stock option grant practices of other companies in the
biotechnology industry.
Mr. Alan Tuck, the Company's President and Chief Executive Officer,
received a salary increase of approximately 2% effective at the beginning of
1995. The salary increase was made after a performance review of the
accomplishments made during 1994 and after an analysis of the average increases
being made within the Company. Mr. Tuck's base salary for 1995 was just 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 1995 employee compensation survey. Mr. Tuck received no salary
increase for 1996. 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 1995.
Mr. Tuck was granted on January 1, 1995 a stock option grant for 18,009
shares at a purchase price of $2.50, with vesting in one year, as his allocation
in a special 1994 year end incentive grant to all employees. In conjunction with
his performance review in December 1995, Mr. Tuck was awarded an option for
81,991 shares at a purchase price of $2.938 and vesting over four years, to
provide him with additional incentive to maximize stockholder value in the
Company.
COMPENSATION COMMITTEE
THOMAS OSTERMUELLER, Chairman
JOHN SIMON
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<PAGE> 12
STOCK PERFORMANCE GRAPH
<TABLE>
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, 1995, 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, 1991 in the Company's
Common Stock and in the two indexes.
[LINE GRAPH]
<CAPTION>
NASDAQ Stock NASDAQ
Measurement Period T Cell Market (U.S.) Pharmaceutical
(Fiscal Year Covered) Sciences, Inc. Index Stock Index
<S> <C> <C> <C>
4/30/91 $100 $100 $100
4/30/92 $106 $121 $123
12/31/92 $114 $143 $141
12/31/93 $119 $164 $125
12/30/94 $ 38 $160 $ 94
12/29/95 $ 48 $227 $173
</TABLE>
INDEPENDENT ACCOUNTANTS
On February 10, 1994, the Board of Directors of the Company approved the
engagement of the firm Price Waterhouse LLP as its independent accountants.
Price Waterhouse replaced KPMG Peat Marwick LLP effective February 10, 1994. The
Company expects that a representative from Price Waterhouse will be present at
the Annual Meeting to respond to appropriate questions.
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, in the
interim period prior to the engagement of Price Waterhouse, there were no
"reportable events" as defined in subparagraph (a)(1)(v) of Item 304 of
Regulation S-K, and neither the Company nor anyone else on its behalf consulted
Price Waterhouse regarding either (i) 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.
10
<PAGE> 13
STOCKHOLDER PROPOSALS FOR 1997 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 1997 Annual Meeting of Stockholders of the Company must
be received by the Company at its offices, attention: Secretary, no later than
March 7, 1997 and no earlier than January 20, 1997 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 12, 1996
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.
11
<PAGE> 14
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITH- FOR ALL
FOR HOLD EXCEPT
1. Election of Directors. / / / / / /
JAMES D. GRANT, PATRICK C. KUNG,
ALAN W. TUCK, JOHN P. MUNSON,
THOMAS R. OSTERMUELLER, JOHN SIMON
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
- -----------------------------------------------------------------------------
- ------Stockholder sign here--------------------Co-owner sign here-----------
T CELL SCIENCES, INC.
Mark box at right if comments of address change / /
have been noted on the reverse side of the card.
DETACH CARD
T CELL SCIENCES, INC.
Dear Stockholder:
Please take note of the important information and voting issue in the proxy
materials enclosed with this Proxy Ballot.
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 21,
1996.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
T Cell Sciences, Inc.
<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 21, 1996
The undersigned hereby appoints James D. Grant, Partick 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 29, 1996, at the Annual Meeting of
Stockholders to be held at 2:00 P.M. on May 21, 1996 at Fleet Bank, Room FG, 75
State Street, Boston, Massachusetts 02109, 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?
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