<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
TCSI CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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
TCSI CORPORATION
1080 MARINA VILLAGE PARKWAY
ALAMEDA, CALIFORNIA 94501
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 7, 1997
TO OUR SHAREHOLDERS
You are cordially invited to the Annual Meeting of Shareholders of TCSI
Corporation (the "Company") which will be held at 3:00 p.m. (local time) on
Wednesday, May 7, 1997, at the Company's offices at 1080 Marina Village Parkway,
Alameda, California 94501, for the following purposes as described in the
accompanying Proxy Statement:
1. To elect six (6) directors to the Board of Directors;
2. To approve the TCSI Employee Stock Purchase Plan;
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the year ending December 31, 1997; and
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Shareholders of record at the close of business on March 17, 1997, are
entitled to notice of, and to vote at the meeting or any adjournments thereof.
Your vote is important to the Company. Please complete, sign, date, and
return the enclosed proxy card in the enclosed, postage-paid envelope. If you
attend the meeting and wish to vote in person, you may withdraw your proxy and
vote your shares in person.
Sincerely,
LOGO
Roger A. Strauch
Chairman of the Board and
Chief Executive Officer
April 4, 1997
<PAGE> 3
MAILED TO SHAREHOLDERS
ON OR ABOUT APRIL 10, 1997
TCSI CORPORATION
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company, for use at the 1997 Annual
Meeting of Shareholders ("Annual Meeting") to be held at 3:00 p.m. (local time)
on Wednesday, May 7, 1997, at the Company's offices at 1080 Marina Village
Parkway, Alameda, California 94501, the Company's principal executive offices.
Each shareholder of record of Common Stock of the Company ("Common Stock")
on March 17, 1997 ("Record Date") is entitled to vote at the Annual Meeting and
will have one vote for each share of Common Stock held at the close of business
on the Record Date. A majority of the shares entitled to vote will constitute a
quorum. On March 17, 1997, there were 21,437,656 shares of Common Stock
outstanding. All references to share numbers herein give effect to the Company's
three-for-two stock split in May 1996.
Shareholders unable to attend the Annual Meeting, may vote by proxy. The
proxies will vote such shares according to your instructions. If a shareholder
returns a properly signed and dated proxy card but does not mark a choice on one
or more items, such shareholder's shares will be voted in accordance with the
recommendations of the Board of Directors as set forth in this Proxy Statement.
The proxy card gives authority to the proxies to vote shares at their discretion
on any other matter presented at the Annual Meeting.
Shareholders may revoke proxies at any time prior to voting at the Annual
Meeting by delivering written notice to the Secretary of the Company, by
submitting a subsequently dated proxy, or by attending the meeting and voting in
person at the meeting. Under applicable state law and the bylaws of the Company,
a quorum is required for the matters to be acted upon at the Annual Meeting. A
quorum is defined as a majority of the shares entitled to vote, represented in
person or by proxy, at the meeting. To pass, each matter submitted to a vote,
except the election of directors, must be approved by a majority of the shares
represented and voting in person or by proxy at the meeting. Shares represented
by proxies which are marked "abstain" or in a manner so as to deny discretionary
authority on any matter will be counted as shares present for purposes of
determining the presence of a quorum; such shares will also be counted as shares
present and entitled to vote, which will have the same effect as a vote against
any matter other than election of directors. Proxies relating to "street name"
shares which are not voted by brokers on one or more matters will not be treated
as shares present for purposes of determining the presence of a quorum unless
they are voted by the broker on at least one matter. Such non-voted shares will
not be treated as shares represented at this meeting as to any matter for which
nonvote is indicated on the broker's proxy. Director nominees must receive a
plurality of the votes cast at the meeting, which means that a vote withheld
will not affect the outcome of the election.
The Company will bear the cost of preparing, handling, printing, and
mailing this Proxy Statement, the accompanying proxy card, and any additional
material which may be furnished to shareholders, and the actual expense incurred
by brokerage houses, fiduciaries, and custodians in forwarding such materials to
beneficial owners of Common Stock held in their names. The solicitation of
proxies will be made by the use of the mails and through direct communication
with certain shareholders or their representatives by officers, directors, or
employees of the Company who will receive no additional compensation therefor.
1
<PAGE> 4
PROPOSAL 1: ELECTION OF DIRECTORS
At the Annual Meeting, six (6) directors of the Company are to be elected
to serve until the next annual meeting and until their respective successors are
elected or appointed. The authorized number of directors of the Company has been
fixed at six (6) by the Board of Directors.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them FOR the six (6) nominees of the Board of Directors named below.
In the event that any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline to
serve as a director. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them FOR the remaining nominees and such proxies may be voted for the election
of a substitute nominee recommended by the Board of Directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE TITLE SINCE
- --------------------------------- --- -------------------------- --------
<S> <C> <C> <C>
Roger A. Strauch 41 Chairman of the Board and
Chief Executive Officer 1987
John C. Bolger 50 Director 1992
William A. Hasler 55 Director 1993
David G. Messerschmitt, Ph. D. 51 Director 1991
Daniel H. Miller 41 Director 1991
Harvey E. Wagner 60 Director 1989
</TABLE>
Except as set forth below, each of the directors has been engaged in the
principal occupation described below. There are no family relationships among
any of the directors listed above.
Roger A. Strauch was appointed Chairman of the Board of Directors in March
1996. Mr. Strauch became a director of the Company upon its incorporation in
1987 and Chief Executive Officer of the Company in 1989. Mr. Strauch also served
as President of the Company from 1987 to December 1996. Prior to the Company's
incorporation, Mr. Strauch served as Vice President of Teknekron Corporation
(the Company was originally formed as a division of Teknekron Corporation). Mr.
Strauch is also a member of the Board of Directors for SymmetriCom Inc.
John C. Bolger became a member of the Board of Directors in July 1992. Mr.
Bolger, now a private investor, served as Vice President, Finance and
Administration, and Secretary of Cisco Systems, Inc. from 1989 until his
retirement in 1992. From 1988 to 1989, he served as Vice President, Finance and
Administration, KLA Instruments Corporation and from 1983 to 1987, Mr. Bolger
served as Vice President, Finance and Administration of Monolithic Memories,
Inc. Mr. Bolger is also a member of the Board of Directors for Sanmina
Corporation, Integrated Systems, Inc., McAfee Associates, Inc., and Integrated
Device Technology, Inc.
William A. Hasler became a member of the Board of Directors in May 1993.
Mr. Hasler is currently Dean of the Walter Haas School of Business at the
University of California at Berkeley. Prior to his appointment at the University
of California in 1991, Mr. Hasler joined the firm of KPMG Peat Marwick in 1972
and served in various executive positions and as a member of the Board of
Directors. Mr. Hasler also serves on the Board of Governors of the Pacific Stock
Exchange and the Board of Directors for The Gap, TENERA, Inc., Aphton, RCM
Strategic Global Government Fund, and Walker Interactive Systems.
David G. Messerschmitt, Ph.D. is currently a Professor in the Electrical
Engineering and Computer Science Department at the University of California at
Berkeley. Dr. Messerschmitt has served on such faculty since 1977. Dr.
Messerschmitt has served as a technical consultant to the Company and Teknekron
Corporation on a part-time basis since 1983 and became a director of the Company
in May 1991.
2
<PAGE> 5
Daniel H. Miller became a consultant to the Company upon his retirement
from the Company in 1994. From 1988 until his retirement, Mr. Miller served as
Executive Vice President of this Company. Previously, Mr. Miller served as a
Vice President of the Company since its incorporation in 1987. Prior to the
Company's incorporation, Mr. Miller was Executive Director of Teknekron
Corporation. Mr. Miller has been a director since May 1991.
Harvey E. Wagner has been a director since 1989 and was Chairman of the
Board of Directors from March 1989 to March 1996. Mr. Wagner is Chairman of the
Board, Chief Executive Officer, and President of Teknekron Corporation, which he
founded in 1968.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF
THE NOMINEES LISTED ABOVE
BOARD MEETINGS, COMMITTEES, AND DIRECTOR COMPENSATION
The Board of Directors held six (6) meetings during 1996. Each Board member
attended all meetings of the Board of Directors and of the committees of the
Board on which he served.
Among the standing committees of the Board of Directors of the Company are
the Compensation Committee and the Audit Committee. The Board of Directors does
not have a Nominating Committee. Selection of nominees for the Company's Board
of Directors is made by the entire Board of Directors.
The Board of Directors has a Compensation Committee composed of three
members, Harvey E. Wagner, John C. Bolger, and William A. Hasler. The
Compensation Committee, composed entirely of non-employee directors, is
responsible for establishing and reviewing annually the compensation levels of
executive officers of the Company and reviewing recommendations made by Company
management concerning salaries and incentive compensation for employees of the
Company. The Compensation Committee met one (1) time during 1996.
The Board of Directors has an Audit Committee composed of two members, John
C. Bolger and William A. Hasler. The Audit Committee reviews the results and
scope of the audit and other services provided by the Company's independent
auditors and recommends the appointment of independent auditors to the Board of
Directors. See Proposal 3. The Audit Committee met three (3) times during 1996.
In 1996, the Board of Directors appointed an Administrative Committee of
the Company's 1991 Stock Incentive Plan and is composed of two members, John C.
Bolger and William A. Hasler. Such committee did not meet in 1996.
Directors who are not employees of the Company received a fee of $1,000 per
meeting of the Board or committee of the Board attended in 1996, plus
reimbursement of expenses incurred in attending such meetings. If the Board of
Directors meeting and a committee meeting occur on the same day, directors who
attend both meetings receive only one (1) fee. Messrs. Bolger, Hasler, Wagner,
Miller, and Dr. Messerschmitt each receive an annual fee of $10,000 in addition
to the per meeting fee. Mr. Miller received $75,850 for consulting work he
performed for the Company during 1996. No other consulting fees were paid to
directors for work performed for the Company during 1996.
Under the 1994 Outside Directors Stock Option Plan (Directors Plan) each
eligible director is granted options to purchase 31,500 shares upon appointment
or election to the Board of Directors. Each year, eligible directors are granted
options to purchase an additional 6,000 shares. Options vest monthly over a
three-year period. Pursuant to this plan, each director, except Mr. Strauch,
received options to purchase 6,000 shares of the Company's Common Stock at an
exercise price of $8.75 per share during the year ended December 31, 1996.
3
<PAGE> 6
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS, AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of January 15, 1997
concerning ownership of Common Stock by each director, the Named Executive
Officers, as defined below, all directors and Named Executive Officers as a
group, and the only persons known by the Company to own 5% or more of the
outstanding shares of its Common Stock. Unless otherwise noted, the listed
persons have sole voting and dispositive powers with respect to the shares held
in their names, subject to community property laws if applicable.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-------------------------
NAME NUMBER PERCENT
----------------------------------------------------- --------- -------
<S> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS
Roger A. Strauch(1)(2)............................... 1,718,000 8.0%
Daniel H. Miller(1).................................. 1,120,319 5.3
Harvey E. Wagner..................................... 629,638 3.0
Ram A. Banin, Ph. D.(1).............................. 183,750 *
David G. Messerschmitt, Ph.D.(1)(2).................. 177,604 *
Paul A. Farmer(1).................................... 101,250 *
Harish S. Rao, Ph.D.(1).............................. 71,625 *
Hatch Graham(1)...................................... 28,125 *
John C. Bolger(1).................................... 27,000 *
William A. Hasler(1)................................. 20,500 *
All directors and named executive officers as a group
(ten persons)(1)(2)................................ 4,077,811 18.6%
</TABLE>
- ---------------
* Less than 1%
(1) Includes options under the Company's stock option plans which are
exercisable on January 15, 1997 or within 60 days thereafter.
(2) Includes shares held in a family trust/family foundation in which the
director controls or shares investment and voting power.
4
<PAGE> 7
COMPENSATION COMMITTEE REPORT
The report of the Compensation Committee (the "Committee") shall not be
deemed incorporated by reference by any general statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934 and
shall not be otherwise deemed filed under such Acts.
The Company's compensation program is reevaluated annually. The program,
designed to encourage teamwork and cooperation and to motivate key personnel,
establishes a base salary for each executive with annual cash incentives to be
paid based on attainment of defined performance goals. The overall structure of
the plan is the same for corporate staff, functional leaders, and other key
personnel in that specific targets are set for each individual. The target bonus
(up to 50% of salary) is paid to an individual achieving expected performance.
Higher percentages may be paid for extraordinary performance.
The annual targets are set by the Committee based on recommendations from
members of executive management at the end of the previous year and include
between two and five specific performance measures focused in the individual's
area of responsibility. The performance of executive officers is measured based
on overall Company performance, including earnings per share. All compensation
awarded is at the discretion of the Board of Directors.
The Committee recognizes that stock options are considered a standard
component of competitive compensation packages throughout the industry. As part
of the Company's longer term incentive compensation program, generally all
employees, including executive officers, are eligible for awards under the
Company's 1991 Stock Incentive Plan, which permits the grant of stock options or
restricted stock. As the options provide value to the owner only when the price
of the Company's stock increases above the grant price of the options, senior
management attains the perspective of a shareholder with regard to the Company's
financial position. Stock option grants are based on a median competitive grant
level dependent only on a threshold level of corporate performance. Stock
options are generally granted at a price equal to the fair market value on the
date of the grant. Stock options are generally granted on an annual basis and
generally vest over four to six years from the date of the grant. The Committee
has the authority to grant additional options at year end (within ranges
established at the beginning of the year) for individuals believed to have
exhibited extraordinary performance during the year. No options were awarded to
executive officers for 1996 due to the Company's weak financial performance.
Senior management also participates in company-wide employee benefit plans,
including the Company's Profit Sharing/401(k) Plan. Benefits under these plans
are not dependent upon individual performance.
The Committee believes that executive compensation should not only be
within competitive norms, but also be highly related to individual and corporate
performance. The 1996 base salaries for Mr. Strauch, the Chief Executive
Officer, and all other executive officers were established at the end of 1995 by
the Committee based upon the Company's 1995 performance. Accordingly, the 1996
base salary for Mr. Strauch was increased from $245,000 in 1995 to $250,000 for
his leadership effort and commitment to the Company. Effective January 1, 1997,
Mr. Strauch's base salary was decreased to $230,000 based upon the 1996
operating results of the Company. Further, Mr. Strauch received no bonus based
upon 1996 corporate results. In early 1996, Mr. Strauch was granted options to
30,000 shares based upon the Company's 1995 performance. Mr. Strauch was not
granted any stock options relating to the Company's 1996 performance.
COMPENSATION COMMITTEE
Harvey E. Wagner, Chairman
John C. Bolger
William A. Hasler
February 28, 1997
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth the compensation of the Company's executive
officers whose cash compensation exceeded $100,000, for the years ended December
31, 1996, 1995, and 1994 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------
-------------------------------- NUMBER OF SECURITIES
OTHER ANNUAL UNDERLYING OPTIONS/ ALL OTHER
SALARY BONUS COMPENSATION SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) (#)(2)(3) ($)(4)
- ----------------------------------- ---- ------- ------- ------------ -------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Strauch 1996 250,000 -- 24,738(12) 30,000 4,750
Chairman of the Board and 1995 245,000 150,000 -- 90,000 4,620
Chief Executive Officer 1994 215,000 135,000 -- 150,000 4,620
Ram A. Banin, Ph.D. 1996 230,000 -- 20,696(12) 75,000 4,750
President and Chief Operating 1995 210,000 200,000 -- 60,000 4,620
Officer
1994 180,000 104,809(5) -- 45,000 4,620
Paul A. Farmer, 1996 180,000 -- 8,091(12) 45,000 3,919
Chief Financial Officer, 1995 165,000 125,000 -- 60,000 4,620
Secretary,
and Treasurer 1994 140,000 70,000 110,914(6) -- 4,620
Hatch Graham, 1996 180,000(8) -- 2,163(12) -- 3,643
Senior Vice President(7) 1995 36,923 135,000(9) 50,000(9) 112,500(9) --
Harish S. Rao, Ph.D. 1996 205,000(11) -- 10,904(12) 55,500 3,853
Senior Vice President, 1995 171,875 175,000 -- 45,000 4,620
Engineering
and Operations(10) 1994 140,000 77,471 -- 27,000 4,620
</TABLE>
- ---------------
(1) Includes bonuses accrued in 1995 and 1994 paid in 1996 and 1995,
respectively.
(2) Reflects options only. No SARs have been issued.
(3) Options have been adjusted for the three-for-two split in May of 1996.
(4) These amounts represent the amounts accrued for the Company's contributions
to the Company's Profit Sharing/401(k) Plan for 1996, 1995, and 1994,
respectively, and allocated to the named executive officers.
(5) Includes $1,500 paid to Dr. Banin for special incentive program.
(6) Represents relocation costs paid in 1994 by the Company on behalf of Mr.
Farmer. In 1994, no other executive officer received compensation other
than the salary and bonus described herein, including incidental personal
benefits, in excess of the lesser of $50,000 or 10% of such officer's cash
compensation.
(7) Mr. Graham resigned from the executive management team subsequent to the
licensing of the Personal Communications Group's wireless technology to
Atmel Corporation late in 1996. Mr. Graham will continue to serve as a vice
president of the Company until October 31, 1997.
(8) Does not include $45,000 paid to Mr. Graham as part of his separation
agreement dated January 1997. Mr. Graham will remain an employee of the
Company until October 31, 1997 and will receive full salary until that
date.
(9) These amounts include a sign-on bonus of $100,000, 1995 bonus of $35,000,
relocation allowance of $50,000, and 112,500 options in accordance with Mr.
Graham's employment agreement.
(10) Dr. Rao resigned from the executive management team in October 1996 and
from the Company in January 1997. Dr. Rao became an executive officer in
August 1995.
(11) Does not include approximately $95,000 paid to Dr. Rao as part of his
separation from the Company in 1997.
(12) Represents cash paid in lieu of accrued vacation.
6
<PAGE> 9
OPTION/SAR GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
------------------------------------------------------ ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
- ------------------------------ ------------ ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Strauch.............. 30,000 2.7% 11.17 1/1/02 $113,932 $258,474
Ram A. Banin, Ph.D............ 75,000 6.7 11.17 1/1/02 284,831 646,184
Paul A. Farmer................ 45,000 4.0 11.17 1/1/02 170,899 387,711
Harish S. Rao, Ph.D........... 55,500 5.0 11.17 1/1/02 210,775 478,176
</TABLE>
- ---------------
(1) Amounts reflect rates of appreciation set forth in the Securities and
Exchange Commission's executive compensation disclosure rules, which are
more flexible than the rules under Financial Accounting Standards Board
Statement 123 used in financial reporting. Actual gains, if any, on stock
option exercises depend on future performance of the Company's common shares
and overall stock market conditions. No assurance can be given that the
amounts reflected in these columns will be achieved.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED
DECEMBER 31, 1996 AND OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS/SARS AT MONEY OPTIONS/SARS AT
ACQUIRED ON VALUE DECEMBER 31, 1996(#) DECEMBER 31, 1996($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---------------------------- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Roger A. Strauch............ -- -- 152,500/147,500 157,500/45,000
Ram A. Banin, Ph.D.......... 45,000 741,500 135,000/135,000 420,003/33,750
Paul A. Farmer.............. 15,000 293,063 75,000/90,000 171,000/0
Harish S. Rao, Ph.D......... 35,200 514,847 46,500/98,250 181,604/17,730
Hatch Graham................ -- -- 28,125/84,375 0/0
</TABLE>
- ---------------
(1) The market closing price at December 31, 1996 was $6.25.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
OPTION TERM
MARKET PRICE EXERCISE REMAINING AT
NUMBER OF OF STOCK AT PRICE AT DATE OF
OPTIONS/SARS TIME OF TIME OF NEW REPRICING OR
REPRICED OR REPRICING OR REPRICING OR EXERCISE AMENDMENT
NAME DATE AMENDED(#) AMENDMENT AMENDMENT PRICE (YRS)
- --------------------- ------ ------------ ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ram A. Banin,
Ph.D............... 1/4/93 90,000 $2.33 $3.47 $ 2.33 4.4
</TABLE>
The foregoing table does not include the January 1997 repricing of options
to purchase 75,000 and 45,000 shares for Dr. Banin and Mr. Farmer, respectively.
On January 13, 1997, the Board of Directors approved an exchange of outstanding
stock options for new options with an exercise price equal to the fair market
value of the Company's Common Stock on January 28, 1997. This exchange offer was
open to all employees of the Company. The new options will have the same terms
as the exchanged options except that all new options will have a term of six
years, and all new options other than options to executive officers, will have a
new vesting schedule.
7
<PAGE> 10
COMPARISON CUMULATIVE TOTAL RETURN AMONG TCSI CORPORATION,
NASDAQ MARKET INDEX, AND PEER GROUP INDEX
The Comparison Stock Performance Graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts. The following graph assumes $100 invested on
July 18, 1991 and all dividends are reinvested. The peer group consists of
companies in the Computer Integrated Systems Design Industry.
<TABLE>
<CAPTION>
Measurement Period Nasdaq Market In-
(Fiscal Year Covered) TCSI Corporation Peer Group dex
<S> <C> <C> <C>
1991 100 100 100
1992 40.00 109.54 100.98
1993 95.00 121.95 121.13
1994 136.67 116.66 127.17
1995 246.67 188.13 164.96
1996 124.94 199.68 204.98
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Mr. Wagner, Mr. Bolger, and
Mr. Hasler. Mr. Wagner is the sole shareholder and Chairman of the Board, Chief
Executive Officer, and President of Teknekron Corporation. The Company was
formed in 1983 as a division of Teknekron Corporation and was incorporated in
1987. Teknekron Corporation is a management company involved in technology
transfer and the development of new high technology companies.
PROPOSAL 2: APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
General The Company's Employee Stock Purchase Plan ("ESPP") was adopted by
the Board of Directors ("Board") in January 1997. The purpose of the ESPP is to
provide employees of the Company and its subsidiaries an opportunity to purchase
common stock of the Company through payroll deductions. It is the intention of
the Company that the ESPP qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
provisions of the ESPP shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code, as amended from time to time.
The ESPP is included in its entirety in Exhibit A. Below is a summary of
the major provisions of the ESPP and should be read together with Exhibit A.
8
<PAGE> 11
Eligibility. All officers and employees of the Company and its
subsidiaries, who are customarily employed for at least 20 hours per week by the
Company or its subsidiaries, are eligible to participate in the ESPP.
Eligibility will not be granted to an employee if:
1. immediately after a grant, such employee (or any other person whose
stock ownership would be attributed to such employee pursuant to Section
424(d) of the Code) would own shares or hold outstanding options to
purchase shares possessing five percent or more of the total combined
voting power or value of all classes of shares of the Company or of any
subsidiary of the Company; or
2. such option would permit the employee's rights to purchase shares under
all employee stock purchase plans of the Company and its subsidiaries to
accrue (i.e., become exercisable) at a rate which exceeds $25,000 of
fair market value of such shares (determined at the time such option is
granted) for each calendar year in which such option is outstanding at
any time.
Stock Purchase. Upon signing a subscription agreement authorizing payroll
deductions, an eligible employee may become a participant in the ESPP. An
employee may participate in the ESPP for one or more offering periods ("Offering
Period") which commence on the first trading day on or after February 1 and
August 1 each year. Participating employees may elect to have up to 15% of their
gross pay deducted each pay date during the Offering Period. Such amounts
deducted cannot exceed $12,500 each Offering Period. At the end of each Offering
Period (the "Termination Date"), the purchase of shares shall be exercised
automatically. The number and price per share are calculated as follows:
1. Each participant is automatically granted an option to purchase up to
the number of whole shares of the Company's common stock arrived at by
dividing (i) $12,500 by (ii) 100% of the fair market value of one share
of the Company's common stock at the beginning of the Offering Period
(Offering Date).
2. The option price per share of the shares to be sold during each Offering
Period shall be the lessor of (i) 85% of the fair market value, as
defined below, of one share of the common stock of the Company at the
Offering Date or (ii) 85% of the fair market value of one share of
common stock at the Termination Date.
3. The fair market value of the Company's common stock shall be determined
by the Board, acting in its sole discretion, and based upon such factors
as the Board determines relevant; provided, however, that if there is a
public market for the common stock, the fair market value of a share of
common stock on a given date shall be the mean of the closing bid and
asked prices for the common stock on such date, as reported in The Wall
Street Journal.
As promptly as practicable after the end of each Offering Period, the
Company shall arrange for issuance and delivery to, or credit to the account of,
each participant, the shares purchased upon exercise of a participant's option.
Withdrawal; Termination of Employment. A participant may terminate his or
her participation in an offering under the ESPP in writing at any time. In such
a case, payroll amounts deducted will be returned to the participant. If an
employee terminates his or her participation in the ESPP effective as of the
first day of the next Offering Date, participation may continue through the end
of the current period's Termination Date. Upon termination of a participant's
employment for any reason, including retirement or death, participation in the
ESPP terminates and as soon as practicable after the termination, payroll
deductions credited to his or her account will be returned. In the event an
employee fails to remain in continuous employ of the Company or its subsidiaries
for at least 20 hours per week during the offering period, the employee will be
withdrawn from the ESPP.
Interest. No interest shall accrue on the payroll deductions of a
participant in the ESPP.
Stock. The maximum number of shares of the Company's common stock which
shall be made available for sale under the ESPP shall be 500,000 shares plus an
annual increase to be added on each anniversary date of the adoption of the ESPP
equal to the lesser of (i) 100,000 shares, (ii) one percent of the outstanding
shares on such date, or (iii) a lesser amount determined by the Board. In the
event the number of shares
9
<PAGE> 12
purchased in the offering exceeds the authorized shares available, a pro rata
allocation of the shares remaining available for grant shall be made in a
uniform and equitable manner.
Administration and powers of the Board. The ESPP shall be administered by
the Board or a committee of members of the Board appointed by the Board. The
committee shall have full and exclusive discretionary authority to construe,
interpret, and apply the terms of the ESPP, to determine eligibility and to
adjudicate all disputed claims filed under the ESPP. Every finding, decision,
and determination made by the Board or its committee shall, to the fullest
extent permitted by law, be final and binding upon all parties. The Board also
has the right to change the duration of the Offering Periods, to limit the
number of participant payroll deduction rate changes per period, and determine
the maximum payroll deduction rate. The Board may terminate the ESPP at any
time.
Term of Plan. The ESPP shall continue in effect until the Board terminates
the ESPP.
Adjustments Upon Changes in Capitalization. In the event of any changes in
the capitalization of the Company, such as a stock split, stock dividend,
combination or reclassification of the Common Stock, resulting in an increase or
decrease in the number of shares of Common Stock, proportionate adjustments will
be made by the Board in the shares subject to purchase and in the price per
share under the ESPP. In the event of a proposed sale of all or substantially
all of the assets of the Company, or their merger or consolidation of the
Company with or into another corporation, or in the event of a proposed
dissolution or liquidation of the Company, the Board shall shorten the Offering
Period then in progress by setting a new Termination Date (the "New Termination
Date"). The New Termination Date shall be before the date of the Company's
proposed dissolution, liquidation, sale, or merger. The Board shall notify each
participant in writing, at least ten (10) business days prior to the New
Termination Date, that the Termination Date for the participant's option has
been changed to the New Termination Date and that the participant's option shall
be exercised automatically on the New Termination Date, unless prior to such
date the participant has withdrawn from the offering.
Certain Federal Income Tax Information. The following brief summary of the
effect of federal income taxation upon the participant and the Company with
respect to the shares purchased under the ESPP does not purport to be complete,
and does not discuss the tax consequences of a participant's death or the income
tax laws of any state or foreign country in which the participant may reside.
The ESPP, and the right of participants to make purchases thereunder, is
intended to qualify under the provisions of Sections 421 and 423 of the Code.
Under these provisions, no income will be taxable to a participant until the
shares purchased under the ESPP are sold or otherwise disposed of. Upon sale or
other disposition of the shares, the participant will generally be subject to
tax in an amount that depends upon the holding period. If the shares are sold or
otherwise disposed of more than two years from the date of enrollment and one
year from the applicable date of exercise, the participant will recognize
ordinary income measured as the lesser of (a) the excess of the fair market
value of the shares at the time of such sale or disposition over the purchase
price, or (b) an amount equal to 15% of the fair market value of the shares as
of the date of enrollment. Any additional gain will be treated as long-term
capital gain. If the shares are sold or otherwise disposed of before the
expiration of these holding periods, the participant will recognize ordinary
income measured as the excess of the fair market value of the shares as of the
Termination Date over the purchase price. The difference between the fair market
value of the shares on the date of the sale or other disposition and the
Termination Date will be either long-term or short-term capital gain or loss,
depending on the holding period. The Company generally is not entitled to a
deduction for amounts taxed as ordinary income or capital gain to a participant
except to the extent of ordinary income recognized by participants upon a sale
or disposition of shares prior to the expiration of the holding periods
described above.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2
10
<PAGE> 13
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 1997. If the
shareholders fail to ratify the appointment, the Board of Directors will
reconsider whether or not to retain that firm. Ernst & Young LLP or its
predecessor has audited the Company's financial statements since 1987.
Representatives of Ernst & Young LLP are expected to be at the Annual Meeting.
Such representatives will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the
Company's 1998 Annual Meeting of Shareholders must be received by the Company no
later than December 12, 1997. Such proposals may be included in next year's
Proxy Statement if they comply with certain rules and regulations promulgated by
the Securities and Exchange Commission.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors, and more than ten percent shareholders are required by
Securities Exchange Commission regulation to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during 1996 its officers, directors, and more than ten percent beneficial
owners complied with all filing requirements applicable to them.
ANNUAL REPORT TO SHAREHOLDERS
The Company's 1996 Annual Report on Form 10-K and 1996 Annual Report to
shareholders accompany this Proxy Statement.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
Annual Meeting, but if any other matters should properly come before the
meeting, it is intended that the persons named in the accompanying proxy will
vote the same in accordance with their best judgment.
By Order of the Board of Directors
Paul A. Farmer
Chief Financial Officer,
Secretary, and Treasurer
April 4, 1997
11
<PAGE> 14
EXHIBIT A
TCSI CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
The following constitutes the provisions of the TCSI Corporation Employee
Stock Purchase Plan (the "Plan") of TCSI Corporation (the "Company").
1. Purpose. The purpose of the Plan is to provide employees of the Company
and its subsidiaries with an opportunity to purchase Common Stock of the Company
through payroll deductions. It is the intention of the Company that the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code, as amended from
time to time.
2. Definitions.
(a) "Compensation," unless otherwise determined by the Board of Directors
of the Company, means total cash compensation from employment reportable on Form
W-2 including, without limitation, regular straight-time gross earnings,
overtime pay, shift premium, incentive compensation, bonuses, and commissions,
but expressly excluding relocation benefits, expense reimbursements, gains
realized in connection with the exercise of stock options or participation in a
stock option or purchase program and contributions by the Company to qualified
deferred compensation plans.
(b) "Employee" means any person, including an officer, who is customarily
employed for at least 20 hours per week by the Company or its subsidiaries.
(c) "Subsidiary" means any corporation described in Section 424 of the Code
in which the Company owns, directly or indirectly, 50% or more of the voting
shares.
(d) "Offering Date" means the first business day of an Offering period of
the Plan.
(e) "Termination Date" means the last business day of an Offering period of
the Plan.
3. Eligibility.
(a) General Rule. Any Employee, as defined in Section 2, who shall have
completed at least 30 days of continuous employment by the Company or its
Subsidiaries on the date his or her participation in the Plan is effective shall
be eligible to participate in the Plan, subject to the limitations imposed by
Section 423(b) of the Code.
(b) Exceptions. Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan if:
(i) immediately after the grant, such Employee (or any other person
whose stock ownership would be attributed to such Employee pursuant to
Section 424(d) of the Code) would own shares and/or hold outstanding
options to purchase shares possessing five percent or more of the total
combined voting power or value of all classes of shares of the Company or
of any Subsidiary of the Company; or
(ii) such option would permit the Employee's rights to purchase shares
under all employee stock purchase plans of the Company and its Subsidiaries
to accrue (i.e., become exercisable) at a rate which exceeds $25,000 of
fair market value of such shares (determined at the time such option is
granted) for each calendar year in which such option is outstanding at any
time.
4. Offerings. The plan shall be implemented by consecutive Offering Periods
with a new Offering Period commencing on the first Trading Day on or after
February 1 and August 1 each year, or on such other date as the Board shall
determine, and continuing thereafter until terminated in accordance with Section
20 hereof. The Board shall have the power to change the duration of Offering
Periods (including the commencement
<PAGE> 15
dates thereof) with respect to future offerings without stockholder approval if
such change is announced at least five (5) days prior to the scheduled beginning
of the first Offering Period to be affected thereafter.
5. Participation. An eligible Employee may become a participant in one or
more Offerings under the Plan by completing and signing a subscription agreement
authorizing payroll deductions on a form provided by the Company (the
"Subscription Agreement") and by filing it with the Company's payroll office not
less than three business days prior to the start of the Offering period with
respect to which it is to be effective unless a different time for filing the
Subscription Agreement has been set by the Company with respect to a given
Offering. An Employee's authorization and participation in the Plan shall become
effective on the first Offering Date following the timely filing of his or her
Subscription Agreement and shall remain effective until revoked by the
participant by the filing of a Payroll Deduction Authorization Change or
Withdrawal form as described in Section 10(a) hereof or until changed by the
filing of a Payroll Deduction Authorization Change or Withdrawal form providing
for a change in the participant's payroll deduction rate; provided, however, the
Company's Board of Directors may, in its discretion, limit the number of
participation rate changes during any offering. An Employee who becomes eligible
to participate in the Plan after the commencement of an Offering period may not
become a participant in the Plan until the commencement of the next Offering.
6. Payroll Deductions.
(a) At the time a participant files his or her Subscription Agreement, he
or she shall elect to have payroll deductions made on each payday during the
next Offering period at a percentage rate equal to a positive whole number not
exceeding 15%, or such other maximum rate as may be determined from time to time
by the Company's Board of Directors (herein sometimes referred to as the
"Board") subject to the provisions of Section 19 hereof, of the Compensation
which would otherwise be payable to such participant on each such payday;
provided, however, that the maximum amount withheld on behalf of a participant
with respect to an Offering period shall not exceed the maximum amount that a
participant might be required to pay upon the exercise of his or her option
determined as of the first day of an Offering period.
(b) Payroll deductions for a participant shall commence on the first payday
following the date when a participant's payroll deduction authorization becomes
effective and shall automatically continue from Offering period to Offering
period until changed or terminated by the participant in accordance with the
terms hereof.
(c) All payroll deductions authorized by a participant shall be credited to
the participant's individual account under the Plan. A participant may not make
any additional payments into such account.
(d) A participant may terminate his or her participation in the Plan at any
time prior to the Termination of the Offering period as provided in Section 10,
but may not change the rate of his or her payroll deductions with respect to an
Offering period during such Offering period.
7. Grant of Option.
(a) On each Offering Date with respect to which a participant's payroll
authorization is effective, each participant in the Plan shall automatically be
granted an option to purchase (at the option price as provided in Section 7(b)
hereof) up to the number of whole shares of the Company's Common Stock arrived
at by dividing (i) $12,500 by (ii) 100% of the fair market value of one share of
the Company's Common Stock at the Offering Date, subject to the limitations set
forth in Sections 3(b) and 12 hereof. The fair market value of a share of the
Company's Common Stock shall be determined as provided in Section 7(c) hereof.
(b) The option price per share of the shares to be sold during each
Offering shall be the lesser of (i) 85% of the fair market value as defined in
7(c) hereof, of one share of the Common Stock of the Company at the Offering
Date or (ii) 85% of the fair market value, as defined in 7(c) hereof, of one
share of the Common Stock of the Company at the Termination Date.
(c) The fair market value of the Company's Common Stock shall be determined
by the Company's Board of Directors, acting in its sole discretion, and based
upon such factors as the Board determines relevant; provided, however, that if
there is a public market for the Common Stock, the fair market value of a share
of Common Stock on a given date shall be the mean of the closing bid and asked
prices for the Common Stock on such date, as reported in The Wall Street Journal
(or, if not so reported, as otherwise reported by The
<PAGE> 16
Nasdaq Stock Market), or, in the event the Common Stock is listed on a national
securities exchange or on the Nasdaq National Market, the fair market value per
share shall be the mean of the closing bid and asked price on such exchange or
on The Nasdaq Stock Market as of the date of grant of the option, as reported in
The Wall Street Journal.
8. Exercise of Option. Unless a participant cancels his or her option and
withdraws from the Plan as provided in Section 10, his or her option for the
purchase of shares shall be exercised automatically at the Termination Date of
the Offering period, and the accumulated payroll deductions credited to a
participant's account on the Termination Date will be applied to purchase whole
shares of the Company's Common Stock (up to the maximum number subject to option
as determined in Section 7(a) hereof) at the applicable option price. Any amount
credited to a participant's account and not applied to the purchase of Common
Stock by reason of the limitation on the number of shares subject to option
shall be refunded promptly to such participant after the Termination Date,
provided that any amount remaining in a participant's account and representing a
fractional share shall be carried over and applied to the purchase of shares in
the subsequent Offering period if the participant participates in the subsequent
Offering. During his or her lifetime, a participant's option to purchase shares
hereunder is exercisable only by such participant.
9. Delivery. As promptly as practicable after the end of each Offering
period, the Company shall arrange for the issuance and delivery to, or credit to
the account of, each participant, as appropriate, of the shares purchased upon
exercise of his or her option. At the election of the Company, the issuance and
delivery of the shares purchased upon exercise of a participant's option may be
effected by transfer (electronic or otherwise in the discretion of the Company)
of such shares to a securities account maintained in such participant's name.
10. Withdrawal; Termination of Employment.
(a) A participant may terminate his or her participation in an Offering
under the Plan and withdraw all, but not less than all, the payroll deductions
credited to his or her account under the Plan at any time prior to a Termination
Date by giving written notice of withdrawal to the Company on a Payroll
Deduction Authorization Change or Withdrawal form provided for such purpose. In
such case, all of the participant's payroll deductions credited to his or her
account shall be paid to him or her promptly after receipt of his or her notice
of withdrawal, his or her option for the current period shall be automatically
canceled, and no further payroll deductions for the purchase of shares shall be
made except pursuant to a new Subscription Agreement filed in accordance with
Section 5 hereof.
A participant may terminate his or her participation in the Plan effective
as of the first day of the next Offering period by giving written notice of
withdrawal to the Company on a Payroll Deduction Authorization Change or
Withdrawal form provided for such purpose. In such case, the participant's
payroll deductions will continue through the end of the Offering period in which
the notice of withdrawal is given, all amounts deducted from the participant's
Compensation during such Offering period will be applied to the purchase of
Common Stock pursuant to the Plan, and following the completion of such Offering
period no further payroll deductions for the purchase of shares shall be made
except pursuant to a new Subscription Agreement filed in accordance with Section
5 hereof.
(b) Upon Termination of a participant's employment for any reason,
including retirement or death, as soon as practicable after such Termination the
payroll deductions credited to his or her account shall be returned to him or
her or, in the case of his or her death, to the person or persons entitled
thereto under Section 14, and his or her option shall be automatically canceled.
(c) In the event an Employee fails to remain in the continuous employ of
the Company or its Subsidiaries for at least 20 hours per week during the
Offering period in which the Employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the payroll deductions credited to
his or her account will be returned to him or her and his or her option will be
canceled.
(d) A participant's withdrawal from an Offering shall not have any effect
upon his or her eligibility to participate in a subsequent Offering or in any
similar plan which may hereafter be adopted by the Company except as noted in
Section 5.
<PAGE> 17
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) Subject to Section 18, the maximum number of shares of the Company's
Common Stock which shall be made available for sale under the Plan shall be
500,000 shares plus an annual increase to be added on each anniversary date of
the adoption of the Plan equal to the lesser of (i) 100,000 shares, (ii) one
percent of the outstanding shares on such date or (iii) a lesser amount
determined by the Board. The shares to be sold to participants in the Plan will
be authorized but unissued shares. Upon the cancellation of any option granted
under the Plan, the shares subject thereto shall return to the Plan and become
available for options thereafter granted under the Plan. If the total number of
shares which would otherwise be subject to options granted pursuant to Section
7(a) hereof at the Offering Date exceeds the number of shares then available
under the Plan (after deduction of all shares for which options have been
exercised or are then outstanding), the Company shall make a pro rata allocation
of the shares remaining available for option grant in as uniform and equitable a
manner as is practicable. In such event, the Company shall give written notice
of such reduction of the number of shares subject to the options to each
participant affected thereby and shall reduce the rate of payroll deductions, if
necessary.
(b) A participant will have no interest or voting right in shares covered
by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall, as
specified in the participant's Subscription Agreement, be registered in the name
of the participant or in the name of the participant and his or her spouse.
13. Administration. The plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The committee shall
have full and exclusive discretionary authority to construe, interpret and apply
the terms of the plan, to determine eligibility and to adjudicate all disputed
claims filed under the plan. Every finding, decision and determination made by
the Board or its committee shall, to the fullest extent permitted by law, be
final and binding upon all parties.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the Termination Date
of an Offering period but prior to delivery to him or her of such shares and
cash. In addition, a participant may file a written designation of a beneficiary
who is to receive any cash from the participant's account under the Plan in the
event of such participant's death prior to the Termination Date of an Offering
period.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a valid designation of a beneficiary who is living at the time of
such participant's death, the Company shall deliver such shares and/or cash to
the executor or administrator of the estate of the participant; or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the participant; or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, pursuant to a qualified domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder, or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 10 hereof.
<PAGE> 18
16. Use of Funds. All payroll deductions received or held by the Company on
behalf of a participant under the Plan may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.
17. Reports. Individual accounts will be maintained for each participant in
the Plan. Individual statements of account will be given to participating
Employees semiannually as promptly as practicable following the Termination Date
of an Offering period, which statements shall set forth the amounts of payroll
deductions, the per share option price, the number of shares purchased and the
remaining cash balance, if any, in a participant's account.
18. Adjustments upon Changes in Capitalization or Control.
(a) Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised and the number of shares of Common Stock which has been
authorized for issuance under the Plan but has not yet been placed under option
or which has been returned to the Plan upon the cancellation of an option, as
well as the option price per share of Common Stock covered by each option under
the Plan which has not yet been exercised, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, stock dividend, spin-off, reorganization,
recapitalization, merger, consolidation, exchange of shares or the like. Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to option.
(b) In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger or consolidation of the Company with or
into another corporation, or in the event of a proposed dissolution or
liquidation of the Company, the offering then in progress shall be shortened by
setting a new Termination Date (the "New Termination Date"). The New Termination
Date shall be before the date of the Company's proposed dissolution,
liquidation, sale or merger. The Board shall notify each participant in writing,
at least ten (10) business days prior to the New Termination Date, that the
Termination Date for the participant's option has been changed to the New
Termination Date and that the participant's option shall be exercised
automatically on the New Termination Date, unless prior to such date the
participant has withdrawn from the offering as provided in Section 10 hereof.
(c) No fractional shares of Common Stock shall be issuable on account of
any adjustment described herein, and the aggregate number of shares into which
shares then covered by an option, when changed as the result of such adjustment,
shall be reduced to the largest number of whole shares resulting from such
adjustment, unless the Board, in its sole discretion, shall determine to issue
scrip certificates in respect to any fractional shares, which scrip
certificates, in such event, shall be in a form and have such terms and
conditions as the Board in its discretion shall prescribe.
19. Amendment or Termination. The Board of Directors of the Company may at
any time terminate or amend the Plan in such respects as the Board may deem
advisable. No such Termination will affect options previously granted, nor may
an amendment make any change in any option theretofore granted which adversely
affects the rights of any participant without the prior written consent of such
participant, nor may an amendment be made without prior approval of the
shareholders of the Company if such amendment would increase the number of
shares that may be issued under the Plan.
20. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by vote of a majority of the
outstanding shares of the Company entitled to vote on the adoption of the Plan.
The Plan shall continue in effect until the Board terminates it pursuant to
Sections 19 or 22 of the Plan.
21. Notices. All notices or other communications (i) by a participant to
the Company in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company at the location, or by the
person, designated by the Company for the receipt thereof and (ii) by the
Company to
<PAGE> 19
a participant in connection with the Plan shall be deemed to have been duly
given when received by the participant or, if earlier, five days after deposit
in the United States mail by certified or registered mail, return receipt
requested, first class postage prepaid, addressed to the participant at his or
her address as shown on the records of the Company or as such participant may
request by written notice to the Company hereunder.
22. Shareholder Approval. Notwithstanding anything to the contrary herein,
the continuance of the Plan and the effectiveness of any option granted
hereunder shall be subject to approval by the affirmative vote of the holders of
a majority of the outstanding shares of stock of the Company present or
represented and entitled to vote thereon at a meeting of shareholders duly held
in accordance with the laws of the State of Nevada, within 12 months before or
after the date the Plan is adopted by the Board. No options granted before such
shareholder approval has been obtained shall be exercisable unless such
shareholder approval is obtained. If the Plan is not approved by the
shareholders of the Company within the above-referenced 12-month period, the
Plan and any options granted hereunder shall terminate and all payroll
deductions credited to a participant's account shall be promptly returned to him
or her.
23. No Enlargement of Employee Rights. The Plan is purely voluntary on the
part of the Company, and the continuance of the Plan shall not be deemed to
constitute a contract between the Company and any Employee, or to be
consideration for or a condition of the employment of any Employee. Nothing
contained in this Plan shall be deemed to give any Employee the right to be
retained in the employ of the Company, its parent, Subsidiary or a successor
corporation, or to interfere with the right of the Company or any such
corporations to discharge or retire any Employee thereof at any time. No
Employee shall have any right to or interest in options authorized hereunder
prior to the grant of an option to such Employee, and upon such grant he or she
shall have only such rights and interests as are expressly provided herein,
subject to, however, all applicable provisions of the Company's Articles of
Incorporation, as the same may be amended from time to time.
24. Information to Participants. The Company shall provide without charge
to each participant in the Plan copies of such annual and periodic reports as
are provided by the Company to its shareholders generally.
25. Governing Law. To the extent that Federal laws do not otherwise
control, the Plan and all determinations made or actions taken pursuant hereto
shall be governed by the laws of the State of Nevada, without regard to the
conflicts of laws rules thereof.
26. Tax Withholding. If at any time the Company or any Subsidiary is
required, under applicable laws and regulations, to withhold, or to make any
deduction of, any taxes or take any other action in connection with any exercise
of an option made hereunder or transfer of shares of Common Stock, the Company
or such Subsidiary shall have the right to deduct from all amounts paid in cash
any taxes required by law to be withheld therefrom, and in the case of shares of
Common Stock, the participant or his or her estate or beneficiary shall be
required to pay the Company or such Subsidiary the amount of taxes required to
be withheld or, in lieu thereof, the Company or such Subsidiary shall have the
right to retain, or sell without notice, a sufficient number of shares of Common
Stock to cover the amount required to be withheld, or to make other arrangements
with respect to withholding as it shall deem appropriate.
27. Securities Law Compliance. No shares of Common Stock may be issued upon
the exercise of any option under the Plan until all requirements of applicable
Federal, state, foreign or other securities laws with respect to the purchase,
sale and issuance of shares of Common Stock shall have been satisfied. If any
action must be taken because of such requirements, then the purchase, sale and
issuance of shares shall be postponed until such action can reasonably be taken.
Upon request by the Company, an Employee shall deliver to the Company such
information, representations or undertakings as the Company may reasonably
request in order to comply with any registration requirements or exemptions
therefrom of applicable securities laws. The Company may require any securities
so issued to bear a legend, may give its transfer agent instructions, and may
take such other steps as in its judgment are reasonably required to prevent any
violation of applicable securities laws.
<PAGE> 20
DETACH HERE
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
P TCSI CORPORATION
R
The undersigned hereby appoints PAUL A. FARMER and CHRISTINE M.
O DAVIS and each of them as proxies for the undersigned, with full power of
substitution, to act and vote all the shares of Common Stock of TCSI
X Corporation held of record by the undersigned on March 17, 1997, at the
annual meeting of shareholders to be held on Wednesday, May 7, 1997, or
Y any adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
<PAGE> 21
DETACH HERE
[X] Please mark
votes as in
this example.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder, if no direction is made,
this proxy will be voted FOR items 1, 2, and 3.
Management Recommends a Vote FOR items 1, 2, and 3.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
1. Election of Directors duly nominated:
Nominees: Roger A. Strauch, John C. Bolger, William A. Hasler, 2. Proposal to approve the TCSI [ ] [ ] [ ]
David G. Messerschmitt, Ph.D., Daniel H. Miller, Harvey E. Wagner Employee Stock Purchase Plan.
FOR WITHHELD 3. Proposal to Ratify the Appoint- [ ] [ ] [ ]
[ ] [ ] ment of Ernst & Young LLP as
Independent Auditors.
4. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before
[ ] ________________________________________________ the meeting.
For all nominees except as noted above
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
Please sign exactly as your name or names appear hereon.
For joint accounts, each owner should sign. When signing
as executor, administrator, attorney, trustee or guardian,
etc., please give your full title.
Signature: ____________________________________ Date: __________ Signature: ____________________________________ Date: __________
</TABLE>
