As filed with the Securities and Exchange Commission on October 23, 1998.
Registration No. 333-____________
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------------------------------------------
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TCSI CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 68-0140975
(State or jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
1080 Marina Village Parkway, Alameda, California 94501
(Address of Principal Executive Offices) (Zip Code)
1991 STOCK INCENTIVE PLAN
(Full title of the plan)
---------------------
Arthur H. Wilder
Vice President, Finance and Chief Financial Officer
TCSI Corporation
1080 Marina Village Parkway
Alameda, California 94501
(Name and address)
(510) 749-8500
(Telephone number, including area code, of agent for service)
Calculation of Registration Fee
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of securities to Amount to be offering price per aggregate offering Amount of
be registered registered share (1) price(1) registration fee
Common Stock, par value
$.10 per share 1,500,000 Shares $ 2.4125 $ 3,618,765 $ 1,067.54
</TABLE>
================================================================================
================================================================================
(1) Estimated in accordance with Rules 457(h) and 457(c) of the Securities Act
of 1933, as amended, solely for the purpose of calculating the registration fee.
The computation with respect to unissued options is based upon the average of
the high and low sale prices per share of Common Stock of TCSI Corporation as
reported on The Nasdaq National Market on October 23, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
The following documents and information previously filed with the
Securities and Exchange Commission (the "Commission") by TCSI Corporation (the
"Company") are hereby incorporated by reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the year ended December 31,
1997 filed pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(b) The Registrant's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998 filed pursuant to Section 13(a) or 15(d)
of the Exchange Act.
(c) The description of the Registrant's Common Stock which is contained in the
Registrant's Registration Statement on Form 8-A filed on July 1, 1991
pursuant to Section 12 of the Exchange Act, and any description of any
securities of the Registrant which is contained in any registration
statement filed after the date hereof under Section 12 of the Exchange Act,
including any amendment or report filed for the purpose of updating any
such description.
(d) The Registrant's Registration Statement on Form S-8 (the "Previous
Registration Statement") filed with the Commission on July 18, 1996
(Registration No. 33-38353).
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment to
this Registration Statement which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents.
ITEM 4. Description of Securities.
Not Applicable.
ITEM 5. Interests of Named Experts and Counsel.
Not Applicable.
ITEM 6. Indemnification of Directors and Officers.
Section 78.751 of the Nevada Revised Statutes permits a corporation to
indemnify and hold harmless any director or officer or other person from and
against any and all claims and demands whatsoever, subject to such standards and
restrictions set forth in the Registrant's Articles of Incorporation and its
Bylaws. The Registrant's Bylaws provide for broad indemnification of various
persons, including its officers, directors, employees and corporate
<PAGE>
agents. In addition, the Registrant has approved and entered into
indemnification agreements with each of its officers and directors which require
that such persons be indemnified by the Registrant to the greatest extent
permitted by the Nevada Law and the Registrant's Articles of Incorporation and
Bylaws.
The Registrant has purchased, and intends to maintain, insurance on
behalf of the Registrant's officers and directors against any liability which
may be asserted against, or expense which may be incurred by, such person in
connection with the activities of the Registrant whether or not the Registrant
would have the power to indemnify such person against such liability under the
Registrant's Articles of Incorporation and Bylaws.
ITEM 7. Exemption from Registration Claimed.
Not Applicable.
ITEM 8. Exhibits.
Exhibit No.
- -------------
4.1 Summary of Material Provisions of the Amended 1991 Stock Incentive Plan
5.1 Opinion of Wilson, Sonsini, Goodrich and Rosati, P.C., with respect to the
legality of the securities being registered, including consent to the use
of such opinion in the Registration Statement
23.1 Consent of Wilson, Sonsini, Goodrich and Rosati, P.C., (contained in their
opinion filed as Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24.1 Power of Attorney (see page II-5)
ITEM 9. Undertakings.
(a) Rule 415 offerings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this
Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any
<PAGE>
material change to such information in this Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Filings incorporating subsequent Exchange Act documents by
reference.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Filing of Registration Statement on Form S-8.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement on Form S-8 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Alameda, State of California, on October 21,
1998.
TCSI Corporation
(Registrant)
By: /s/ Ram A. Banin
--------------------------------------
Ram A. Banin,
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Arthur H. Wilder
--------------------------------------
Arthur H. Wilder,
Vice President, Finance and Chief
Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act this Registration
Statement and power of attorney have been signed by the following persons in the
capacities and on the dates indicated.
By his signature, each of the following persons authorizes Ram A. Banin
or Arthur H. Wilder or any of them, with full power of substitution, to execute
in his name and on his behalf, and to file any amendments (including, without
limitation, post-effective amendments) to this Registration Statement necessary
or advisable in the opinion of any of them to enable the Company to comply with
the Securities Act, and any rules, regulations and requirements of the
Commission thereunder, in connection with the registration of the additional
securities which are the subject of this Registration Statement.
Signature Title Date
/s/ John C. Bolger Chairman of the Board October 22, 1998
- ------------------------ of Directors
John C. Bolger
/s/ Ram A. Banin President, Chief Executive October 22, 1998
- ------------------------ Officer and Director
Ram A. Banin, Ph.D.
/s/ Norman E. Friedmann Director October 22, 1998
- ------------------------
Norman E. Friedmann, Ph.D.
/s/ Donald Green Director October 22, 1998
- ------------------------
Donald Green
/s/ William A. Hasler Director October 22, 1998
- ------------------------
William A. Hasler
/s/ David G. Messerschmitt Director October 22, 1998
- ------------------------
David G. Messerschmitt, Ph.D.
/s/ Harvey E. Wagner Director October 22, 1998
- ------------------------
Harvey E. Wagner
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ------------ ---------
4.1 Summary of Material Provisions of the Amended 1991 Stock Incentive Plan
5.1 Opinion of Wilson, Sonsini, Goodrich and Rosati, P.C., with respect to the
legality of the securities being registered, including consent to the use
of such opinion in the Registration Statement
23.1 Consent of Wilson, Sonsini, Goodrich and Rosati, P.C., (contained in their
opinion filed as Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24.1 Power of Attorney (see page II-5)
<PAGE>
EXHIBIT 4.1
1991 STOCK INCENTIVE PLAN
THIS DOCUMENT CONSTITUTES PART OF
THE PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
TCSI Corporation
1991 Stock Incentive Plan
Summary Description
(as amended June 1997)
In May 1991, TCSI Corporation (the "Company"), formally known as
Teknekron Communications Systems, Inc., adopted the TCSI Corporation 1991 Stock
Incentive Plan (the "Plan"). The Plan has been amended several times since its
adoption. The Plan was adopted in order to promote the long-term success of the
Company by providing incentives for key employees and consultants of the Company
and by facilitating the efforts of the Company to obtain and retain employees
and consultants of outstanding ability and exceptional qualifications and
linking participants directly to stockholder interests through increased stock
ownership.
The Plan provides for the issuance of incentive stock options ("ISOs"),
non-qualified stock options ("NSOs"), and restricted stock awards to key
employees and consultants of the Company. Currently up to Seven Million Five
Hundred Thousand (7,500,000) shares of Common Stock of the Company, par value
$.01 per share, may be issued pursuant to the Plan from unissued or treasury
shares. Beginning in January 1997, the number of shares available for issuance
shall be increased by 750,000 shares per year.
All officers and employees of and consultants to the Company and any
future subsidiaries are eligible for participation in the Plan, provided however
that only employees are eligible for ISOs.
The Plan will terminate on May 19, 2001, subject to earlier termination
by the Board of Directors.
The Company has agreed to register and/or qualify the Plan, and has
filed Registration Statements on Form S-8 with the Securities and Exchange
Commission.
You have been granted an award under the Plan. The type of award (ISO,
NSO or restricted stock) and the terms of that award, including the number of
shares subject to the award, are set forth in a grant letter and Annex I to 1991
Stock Option Incentive Plan Non-Qualified Option Agreement.
Administration of the Plan
The Plan is administered by a Committee which consists of not less than
two directors of the Company who are disinterested persons within the meaning of
Section 162(m) of the Internal Revenue Code and accordingly are ineligible to
participate in the Plan (the "Committee"). The Committee is appointed by the
Board of Directors of the Company. The Committee has the sole discretion,
subject to certain limitations, to interpret the Plan, to select participants,
to determine the size, type, terms and
<PAGE>
conditions of awards under the Plan, to authorize the grant of such awards, and
to adopt, amend and rescind rules relating to the Plan.
The Committee's powers include, without limitation, the adoption of
modifications, amendments, procedures, subplans and the like as are necessary to
comply with provisions of the laws of other countries in which the Company may
operate in order to assure the viability of Awards granted under the Plan and to
enable participants employed in such other countries to receive advantages and
benefits under the Plan and such laws.
The Board of Directors of the Company may at any time suspend,
discontinue, or modify the Plan, provided that such modifications do not
materially impair any rights or obligations under any award made theretofore
under the Plan without the consent of the participant to whom such award was
made. No amendment to the Plan (unless approved by the shareholders of the
Company) shall increase the number of shares of Common Stock in respect of which
awards may be granted, amend the provisions regarding the incentive stock
options so as to disqualify them under section 422, modify the class of eligible
employees, or materially increase the benefits accruing to participants.
Neither the Plan nor any award granted under the Plan confers upon any
employee or consultant of the Company any right to continue in the employment or
service of the Company or affect the right of the Company to dismiss any
employee or terminate any consulting engagement.
No award or other right granted to any participant under the Plan shall
be assignable or transferable, other than by will or by the laws of descent and
distribution. During the life of the participant, all rights granted to the
participant under the Plan or under any Agreement shall be exercisable only by
him or her or by his or her guardian or legal representative.
Description of Awards Under the Plan
Options.
The Plan authorizes the award of two types of options: ISOs and NSOs. A
stock option is a right granted by the Committee to the participant to purchase
a specified number of shares of Common Stock from the Company at a price
determined by the Committee at the date of grant. All options, whether ISOs or
NSOs, are evidenced by a stock option grant letter sent to the participant. The
maximum number of shares of common stock that may be granted to any participant
in any fiscal year is 200,000.
ISOs.
Incentive Stock Options may be granted to eligible participants at such
times determined by the Committee, until April 30, 2000. The per share Incentive
Stock Option price shall not be less than 100% of the fair market value at the
time the option is granted. No ISO may be granted to an individual who, at the
time of the proposed grant, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, unless the
exercise price of such ISO is at least 110% of the fair market value of a share
of Common Stock at the time the option is granted, and such ISO must expire five
years from the date it is granted.
The aggregate fair market value of the shares of Common Stock with
respect to which ISOs are first exercisable during any calendar year by any
eligible participant shall not exceed $100,000. If the aggregate fair market
value exceeds this amount, the ISOs granted to such
<PAGE>
participant shall automatically be deemed to be NSOs.
NSOs.
Non-Qualified Stock Options to purchase unrestricted shares of Common
Stock or Restricted Stock may be granted to eligible participants at such times
determined by the Committee. The option price per share shall be established by
the Committee and may be less than 100% of the fair market value at the time of
the grant. The NSO grant may include any other terms and conditions not
inconsistent with the Plan as determined by the Committee, including making the
NSOs exercisable in installments and at varying times depending upon events
specified in the grant (i.e., vesting schedules).
Exercise of Options
Each participant may elect to exercise an option which has been granted
to that participant at any time thereafter, in whole or in part, from time to
time within the period specified by the Committee at the time of the grant. This
exercisability period may not exceed ten years from the date of the grant. The
options all expire no later than three months following termination of
employment for reasons other than death, disability or retirement. The Committee
may establish a period of longer than three months in the event of termination
as a result of death, disability or retirement for NSOs or as a result of death
for ISOs. ISOs will terminate not later than three months after termination by
reason of retirement and not later than twelve months after termination by
reason of disability.
A participant who elects to exercise an option may do so by filing a
written notice of exercise with the Company, specifying the number of shares as
to which the option is exercised.
The exercise price of any option must be paid in full at the time of
the exercise. The Plan permits the exercise price of the option to be paid to
the Company in cash, by certified check, bank cashier's check or wire transfer,
or if permitted by the Committee, by means of tendering Common Stock or
surrendering another award, including restricted stock, or other option held by
the participant, in each case valued at the fair market value on the date of
exercise.
The Plan permits an option granted under the Plan to be exercised by a
broker-dealer acting on behalf of the participant upon delivery of a duly
executed notice of election of exercise to the broker-dealer, if adequate
provision has been made for the payment of any withholding taxes due and the
parties otherwise comply with Regulation T as promulgated by the Federal Reserve
Board.
If the participant fails to accept delivery of and pay for all or any
part of the number of shares specified in the notice of exercise upon tender or
delivery thereof, the participant's right to purchase such undelivered shares
may be terminated.
Restricted Stock
The Committee is authorized under the Plan to issue shares of
restricted Common Stock to eligible employees and consultants selected by the
Committee. The Committee will determine the eligible participants to whom such
grants will be made, the number of shares to be awarded, the price, if any, to
be paid by the recipient, and all other conditions of the awards. Awards of
restricted stock must be accepted within thirty days (or such shorter period as
the Committee may specify) after the award date, by executing and delivering a
restricted stock award agreement and
<PAGE>
paying whatever price (if any) is required.
The participant shall not be permitted to sell, transfer, pledge,
assign, or otherwise encumber shares of Restricted Stock during the restriction
period as determined by the Committee. Any attempt to transfer shares of
restricted stock during the restriction period, or noncompliance with any other
conditions the Committee has placed on the shares shall act as a forfeiture of
such shares. Termination of employment will also forfeit a participant's right
to any shares still restricted, unless the Committee waives the restrictions.
During the period of restriction, a participant will be entitled to
beneficial ownership of the restricted stock, including the right to vote the
shares and to receive dividends, if any are paid. Once the restriction period
ends, the participant will receive certificates evidencing the ownership of the
shares without restriction.
Loans to Finance the Purchase of Stock
The Company or any subsidiary may make loans to a participant in
connection with the exercise of an option or acquisition of restricted stock,
subject to the terms and conditions the Committee may impose from time to time.
No loan made under the Plan shall exceed the sum of the aggregate
purchase price payable pursuant to the award with respect to which the loan is
made, plus the amount of the reasonably estimated income taxes payable by the
participant with respect to the award. The loan shall in no event exceed the
fair market value of the shares of stock acquired upon such exercise or
acquisition. No loan shall have an initial term exceeding five years, but loans
shall be renewable at the discretion of the Committee. The loans made pursuant
to the Plan shall become immediately due and payable in full upon the
termination of employment of the participant.
Loans under the Plan shall be with full recourse against the
participant to whom the loan is granted, and shall be secured by a pledge of
shares with a fair market value of not less than the principal amount of the
loan at the time the loan is made. Loans under the Plan may be satisfied in cash
or, with the consent of the Committee, by the transfer of shares of Common
Stock, the fair market value of which on the date of such payment is equal to
the amount of the loan so satisfied.
Resales of Stock Issued Under the Plan
Participants who receive stock under the Plan (whether by exercise of
options or receipt of restricted stock awards) and who are not "affiliates" of
the Company within the meaning of the rules and regulations under the Securities
Act of 1933, as amended (the "Securities Act"), ordinarily may publicly resell
the stock received pursuant to the Plan without registration under the
Securities Act, in reliance on Section 4(1) thereof. Affiliates of the Company
may not publicly resell stock received pursuant to the Plan without separate
registration under the Securities Act, compliance with Rule 144 promulgated
under the Securities Act or reliance upon another exemption under the Securities
Act.
Under Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") and the rules and regulations promulgated thereunder, any
Reporting Person who sells stock received under the Plan within six months of
the receipt of the option or the restricted stock award will be obligated to
match the receipt of such shares with any sales of shares of the Company's
Common Stock within six months before or after the receipt of the option or
restricted stock award and may be obligated to pay to the Company all or a
portion of any amount of the sales price received for
<PAGE>
the shares sold in excess of the purchase price paid for the stock. If the
participant holds the option (or upon exercise, the stock) received under the
Plan for more than six months collectively, then the acquisition of such options
and/or shares will not be treated as a purchase of securities for purposes of
Section 16(b). Reporting Persons are advised to consult their individual counsel
as to their status as an affiliate and as to the applicability of Section 16(b)
of the Exchange Act to the acquisition of an option or restricted stock under
the Plan and to the sale of such stock or other sales of the Company's Common
Stock within six months before or after such acquisition.
Tax Effects
THE COMPANY TRUST HAS NOT REQUESTED A RULING FROM THE INTERNAL REVENUE
SERVICE, OR AN OPINION OF COUNSEL, REGARDING THE INCOME TAX CONSEQUENCES TO ANY
AFFECTED PARTY WHICH WILL RESULT FROM THE TRANSACTIONS DESCRIBED HEREIN.
Accordingly, the following is merely a general summary of anticipated federal
income tax consequences, which is not intended to be relied on by participants.
The Company intends, however, to file tax and information returns, and otherwise
report the transactions, on the basis described in the succeeding paragraphs,
unless it determines, based on professional advice, that such reporting would
not be correct. State and local tax consequences of the contemplated
transactions are not addressed in the following discussion. PARTICIPANTS ARE
STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING ALL APPLICABLE
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THEIR PARTICIPATION IN THE STOCK
PLAN.
ISOs.
An employee who is granted an ISO will not recognize taxable income
either on the date of grant or on the date of its timely exercise. However, the
excess of the fair market value of the shares of the Company's Common Stock on
the date of exercise over the exercise price is an item includible in the tax
base upon which the alternate minimum tax may be imposed. A participant may be
required to pay an alternative minimum tax even though the participant receives
no cash upon exercise of the ISO with which to pay such tax.
Disposition of Common Stock acquired upon exercise of an ISO will
result in the recognition of long term capital gain or loss equal to the
difference between the sale price and the option exercise price, provided the
participant has not disposed of the Common Stock within two years of the date of
grant, and one year of the date of exercise. If the participant does not satisfy
these holding periods, the disposition of the option shares is a "disqualifying
disposition" and the participant will recognize income in the year of the
disqualifying disposition equal to the excess of the amount received for the
shares over the exercise price. Of that income, the portion equal to the excess
of the fair market value of the shares at the time the ISO was exercised over
the exercise price will be treated as compensation to the participant, taxable
as ordinary income, and the balance, (if any) will be long-term or short-term
capital gain depending on whether the shares were sold more than one year after
the ISO was exercised. If the participant sells the shares in a disqualifying
disposition at a price that is below the exercise price, the loss will be a
short-term capital loss if the participant has held the shares for one year or
less and otherwise will be a long-term capital loss.
Under current IRS rulings, special rules apply for determining a
participant's tax basis in and holding period for Common Stock acquired upon the
exercise of an ISO if the participant pays the exercise price of the shares in
whole or in part with previously owned shares of Company Common Stock. Under
these rules, the participant does not recognize any income or loss from
<PAGE>
delivery of shares of Common Stock (other than shares previously acquired
through the exercise of an ISO and not held for the statutory holding periods)
in payment of the exercise price. The participant's basis in and holding period
(for capital gain purposes, but not for disqualifying disposition purposes) for
the previously-owned shares will carry over to the newly-acquired shares on a
share-for-share basis up to a number of newly-acquired shares equal to the
number of previously-owned shares delivered; as to each remaining newly-acquired
share, the participant's basis will be zero (or, if part of the exercise price
is paid in cash, the amount of such cash divided by the number of remaining
newly-acquired shares) and the participant's holding period will begin on the
date such share is transferred to the employee.
If a participant pays the exercise price of an ISO in whole or in part
with previously-owned shares that were acquired upon the exercise of an ISO and
have not been held for the statutory holding periods, the participant will
recognize compensation income (but not capital gain) under the rules applicable
to disqualifying dispositions.
The Company is not entitled to any deduction with respect to the grant
or exercise of an ISO or the subsequent disposition of the shares acquired upon
exercise of an ISO if the participant does not have any disqualifying
dispositions. If the participant has compensation taxable as ordinary income as
a result of a disqualifying disposition, the Company will be entitled to a
deduction of an equivalent amount in the year in which the disqualifying
disposition occurs.
NSOs.
A participant who is granted a NSO recognizes no income upon the grant
of the NSO. At the time of exercise, however, the participant recognizes
compensation income equal to the difference between the option exercise price
and the fair market value of the Common Stock on the date of exercise. This
income is subject to income and employment tax withholding. The Company is
entitled to an income tax deduction corresponding to the compensation income
recognized by the participant, unless the compensation is treated as a capital
expenditure or inventory cost. If the participant is subject to the restrictions
of Section 16(b) of the Securities Exchange Act of 1934, the time of recognition
of compensation and the amount thereof, and the availability of a tax deduction
to the Company, will be determined when such restrictions cease to apply.
Upon a subsequent sale of the Common Stock acquired upon exercise of a
NSO, the participant will recognize capital gain or loss equal to the difference
between the sales proceeds and the tax basis of the shares sold. The
participant's capital gain will be long-term or short-term, depending upon
whether the stock sold was held more than one year. The Company will not receive
a deduction for any gain recognized by the participant.
If the participant pays the exercise price for a NSO entirely in cash,
the participant's tax basis in the Common Stock received equals the stock's fair
market value on the exercise date and the participant's holding period begins on
the day after the exercise date. If, however, the participant pays the exercise
price of a NSO in whole or in part with previously-owned shares of Common Stock,
then the participant's tax basis in and holding period for the newly-acquired
shares will be determined as follows: as to a number of newly-acquired shares
equal to the number of previously-owned shares delivered, the participant's
basis in and holding period for the previously-owned shares will carry over to
the newly-acquired shares on a share-for-share basis, thereby deferring any gain
inherent in the previously-owned shares. As to each remaining newly acquired
share, the participant's basis will equal the share's value on the exercise date
and the participant's holding period will begin on the day after the exercise
date. The participant's compensation income, which is taxable as ordinary income
upon such exercise, and the Company's deduction will not be
<PAGE>
affected by whether the exercise price is paid in cash or in shares of Common
Stock.
Restricted Stock.
A participant granted restricted stock will in most cases be subject to
tax at ordinary income rates on the fair market value of the restricted stock at
the time the restrictions lapse or the shares otherwise become vested. However,
a participant who makes an election under Section 83(b) of the Code within 30
days of the date of grant will have ordinary income as of such date equal to the
fair market value of the shares of restricted stock determined without regard to
the restrictions. If the shares subject to such election are forfeited, the
participant will not be entitled to a deduction, refund or loss for tax
purposes, except to the extent of any cash or property paid for the stock. In
the case of a sale of shares after the expiration of the restriction period, the
holding period to determine whether the participant has long-term or short-term
capital gain or loss begins upon such expiration and the tax basis for such
shares will be equal to the fair market value thereof on such date. If the
participant elects to be taxed as of the date of grant, however, the holding
period commences on such date and the tax basis will be equal to the fair market
value of the shares on the date of grant determined without regard to the
restrictions. The Company will in most instances be entitled to a deduction
equal to the amount treated as compensation to the participant.
Withholding of Tax. The Plan permits the Company to deduct applicable
taxes from any Award payment and withhold an appropriate number of shares for,
or require the participant to remit an amount sufficient to satisfy, the payment
of all taxes required by any federal, state or other governmental withholding
tax requirements or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of taxes. Effective
January 1, 1993, applicable withholding rates were increased to 31% under
federal law, with an additional 6% withholding under California law for
California residents. The Company may elect to deduct such taxes from any other
amounts payable then or thereafter in cash or otherwise to the participant. If
permitted by the Committee, a participant may make a written election to have
shares of the Common Stock withheld from the shares otherwise to be received. If
the Committee in its discretion permits Common Stock to be used to satisfy tax
withholding, such stock shall be valued based on the Fair Market Value of the
Common Stock on the date the applicable tax is required to be withheld.
General Considerations. The Plan is not subject to the Employment
Retirement Income Security Act of 1974, as amended and is not a qualified Plan
under Section 401(a) of the Internal Revenue Code of 1986, as amended.
PARTICIPANTS MUST UNDERSTAND THAT NO ASSURANCE CAN BE GIVEN THAT THE INTERNAL
REVENUE SERVICE WILL AGREE WITH ALL, OR ANY, OF THE ANTICIPATED TAX CONSEQUENCES
DESCRIBED ABOVE. BECAUSE OF THE COMPLEXITY OF THE TAX LAW AND APPLICABLE
REGULATIONS, AND THE LACK OF DIRECT AUTHORITY ON MANY OF THE ISSUES, OTHER TAX
TREATMENTS OF THE TRANSACTIONS, WHICH COULD BE LESS FAVORABLE TO PARTICIPANTS,
ARE POSSIBLE AND MAY ULTIMATELY BE DETERMINED TO BE CORRECT, THEREBY EXPOSING
PARTICIPANTS TO RISKS OF INTEREST AND PENALTIES. CHANGES IN THE LAW AND
REGULATIONS MAY ALSO AFFECT THE CONSEQUENCES DISCUSSED ABOVE.
Further Information
Any participant who would like to obtain further information about the
Plan and its
<PAGE>
administrators, including copies of the Plan as amended from time to time,
should contact the Director of Human Resources at the Company, 1080 Marina
Village Parkway, California 94501, telephone number (510) 749-8500.
The Company will provide, without charge, to any participant who may so
request, any and all of the following: the Company's latest prospectus filed
pursuant to Rule 424(b) under the Exchange Act, all other reports filed pursuant
to Section 13(a) or 15(d) of the Exchange Act since December 31, 1991 and copies
of all other reports, proxy statements and other communications distributed to
the Company's shareholders. Any such request should be directed to TCSI
Corporation's Director of Human Resources at the above-referenced address and
telephone number.
<PAGE>
EXHIBIT 5.1
October 20, 1998
TCSI Corporation
1080 Marina Village Parkway
Alameda, CA 94501
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about October 24, 1998
(the "Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 1,500,000 shares of your Common Stock
(the "Shares") reserved for issuance under the TCSI Corporation 1991 Stock
Incentive Plan (the "Plan"). As legal counsel for TCSI Corporation, we have
examined the proceedings taken and are familiar with the proceedings taken or
proposed to be taken by you in connection with the sale and issuance of the
Shares under the Plan.
It is our opinion that, when issued and sold in the manner referred to
in the Plan and pursuant to the respective agreement which accompanies each
grant pursuant to the Plan, the Shares will be legally and validly issued, fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments to it.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the TCSI Corporation 1991 Stock Incentive Plan and in the
related Prospectus, of our report dated January 27, 1998, with respect to the
consolidated financial statements and financial statement schedule of TCSI
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Francisco, California
October 23, 1998
