<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1996.
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
___________________________
PC SERVICE SOURCE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 5065 52-1703687
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)
</TABLE>
2350 VALLEY VIEW LANE
DALLAS, TEXAS 75234
(214) 406-8583
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
_______________________
PC SERVICE SOURCE, INC. 1996 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)
______________________
<TABLE>
<S> <C>
MARK T. HILZ COPIES OF COMMUNICATIONS TO:
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PC SERVICE SOURCE, INC. BRIAN M. LIDJI, ESQ.
2753 VALLEY VIEW LANE SAYLES & LIDJI, P.C.
DALLAS, TEXAS 75234 4400 RENAISSANCE TOWER
(214)406-8583 1201 ELM STREET
(Name, address, including zip code, and telephone DALLAS, TEXAS 75270
number, including area code, of agent for service) (214)939-8700
</TABLE>
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Title of each class of Proposed maximum Proposed maximum
securities to be Amount to offering price aggregate Amount of
registered be registered per unit offering price registration fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share 100,000 $13.8125 (1) $1,381,250 $476.26
========================================================================================================================
</TABLE>
(1) Pursuant to Rule 457 of the Securities Act of 1933, as amended (the
"Securities Act"),the maximum offering price per share and the
aggregate offering price were calculated based upon the average of the
bid and asked prices of the Common Stock, par value $0.01 per share
(the "Common Stock") on the Nasdaq National Market on July 24, 1996.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of Form
S-8 (plan information and registrant information) will be sent or given to
employees as specified by Rule 428(b)(i) of the Securities Act. Such documents
need not be filed with the Securities and Exchange Commission (the
"Commission") either as a part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 of the Securities
Act. These documents, which include the statement of availability required by
Item 2 of Form S-8, and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Form S-8 (Part II hereof), taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act.
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents of the Company previously filed with the
Commission are incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
(2) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996;
(3) the Company's Registration Statement on Form S-1, Registration
No.333-03977, effective on June 5, 1996; and
(4) the description of the Company's Common Stock is contained in
the Prospectus dated June 6, 1996, which is incorporated
herein.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities and Exchange Act of 1934 (the "Exchange
Act"), prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be part thereof from the date of filing of such
documents. Any statement contained herein or in a document, all or a portion
of which is incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or amended,
to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
The Company's Common Stock, par value $0.01 per share, is registered
pursuant to Section 12 of the Exchange Act, and, therefore, the description of
securities is omitted.
<PAGE> 3
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Generally, Delaware law permits a corporation to indemnify a person
who was or is an officer, director, agent, or employee, or who serves at the
corporation's request as an officer, director, agent, or employee, of another
corporation, partnership, trust joint venture, or other enterprise
("nominee"), who was, is, or is threatened to be named a defendant in a legal
proceeding by virtue of such person's position in the corporation or nominee,
but only if the person acted in good faith and reasonably believed that the
conduct was in or at least not opposed to the corporation's best interest, and,
in the case of a criminal proceeding, the person had no reasonable cause to
believe the conduct was unlawful. A person may be indemnified within the above
limitations against judgments, fines, settlements, and reasonable expenses
actually incurred. Generally, an officer director, agent, or employee of the
corporation or nominee may not be indemnified, however, against judgments,
fines, and settlements incurred in a proceeding in which the person is found
liable to the corporation and may not be indemnified for expenses unless, and
only to the extent that, in view of all the circumstances, the person is fairly
and reasonably entitled to indemnification for such expenses. A corporation
must indemnify a director, officer, employee, or agent against reasonable
expenses incurred in connection with a proceeding in which the person is a
party because of the person's corporate position, if the person was successful,
on the merits or otherwise, in the defense of the proceeding. Under certain
circumstances, a corporation may also advance expenses to such person. Under
Delaware law, a corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, or agent of the
corporation against any liability asserted against and incurred by the person
in such capacity, or arising out of the person's status as such a person,
regardless of whether the applicable law otherwise empowers the corporation to
indemnify that person against such liability.
Article Eleventh of the Restated Certificate of Incorporation of the
Company requires indemnification of directors and officers to the fullest
extent permitted by the Delaware General Corporation Law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS
The following documents are filed as a part of this registration
statement. Where such filing is made by incorporation by reference to a
previously filed report, such report is identified. The Index to Exhibits
included with the exhibits may be found on Page II-5 of this report.
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
4 PC Service Source, Inc. 1996 Employee Stock Purchase Plan.
5 Opinion of Sayles & Lidji, P.C.
23.1 Consent of Sayles & Lidji, P.C. (included in their opinion filed as Exhibit 5)
</TABLE>
II-2
<PAGE> 4
<TABLE>
<S> <C>
23.2 Consent of KPMG Peat Marwick LLP
24 Power of Attorney (see signature page of this Registration Statement - Page II-4)
</TABLE>
ITEM 9. UNDERTAKINGS
(a) 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 to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(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; and
(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) 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 the
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) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant tot he 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 of 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.
II-3
<PAGE> 5
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dallas, State of Texas, on the 31st day of July,
1996.
PC SERVICE SOURCE, INC.
By: /s/ Mark T. Hilz
-----------------------------------
Mark T. Hilz
President and Chief Executive Officer
POWER OF ATTORNEY
Each individual whose signature appears below hereby designates and
appoints Avery More, Mark T. Hilz and Bernard Rohde, and each of them, as such
person's true and lawful attorneys-in-fact and agents (the "Attorneys-in-Fact")
with full power of substitution and resubstitution, for such person and in such
person's name, place, and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration
statement, which amendments may make such changes in this registration
statement as either Attorney-in-Fact deems appropriate and requests to
accelerate the effectiveness of this registration statement, and to file each
such amendment with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto such
Attorneys-in-Fact and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such
Attorneys-in-Fact or either of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 31st day of July, 1996.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Mark T. Hilz President, Chief Executive Officer and Director
- ------------------------------------------- (Principal Executive Officer)
Mark T. Hilz
/s/ Avery More Chairman of the Board, Chief Financial Officer
- ------------------------------------------- and Director
Avery More (Principal Financial Officer)
/s/ Bernard W. Rohde Chief Accounting Officer, Controller and Secretary
- ------------------------------------------- (Principal Accounting Officer)
Bernard W. Rohde
Director
- -------------------------------------------
Morti Tenenhaus
/s/ Philip W. Wise Director
- -------------------------------------------
Philip W. Wise
/s/ Robert S. Leff Director
- -------------------------------------------
Robert S. Leff
/s/ Edward L. Raymund Director
- -------------------------------------------
Edward L. Raymund
Director
- -------------------------------------------
Jay Haft
Director
- -------------------------------------------
James Ounsworth
</TABLE>
II-4
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- -----------
<S> <C>
4 PC Service Source, Inc. 1996 Employee Stock Purchase Plan
5 Opinion of Sayles & Lidji, P.C.
23.1 Consent of Sayles & Lidji, P.C. (included in their opinion filed as Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
24 Power of Attorney (see signature page of this Registration Statement - Page II-4)
</TABLE>
II-5
<PAGE> 1
EXHIBIT 4
PC SERVICE SOURCE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
1.01. Purpose. The 1996 PC Service Source, Inc. Employee Stock
Purchase Plan (the "Plan") is intended to provide a method whereby employees of
PC Service Source, Inc. and its subsidiary corporations (hereinafter referred
to, unless the context otherwise requires, as "PCSS" or the "Company") will
have an opportunity to acquire a proprietary interest in the Company through
the purchase of up to a total of 100,000 shares of the common stock of the
Company ("Common Stock"). 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 be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
ARTICLE II
DEFINITIONS
2.01. Base Pay. "Base Pay" shall mean regular straight-time earnings
excluding payments for overtime, shift premium, bonuses and other special
payments, commissions and other marketing incentive payments.
2.02. Committee. "Committee" shall mean the individuals described in
Article XI.
2.03. Employee. "Employee" means any person who is customarily
employed on a full-time basis by the Company, which shall mean that such person
is regularly scheduled to work not less than 20 hours per week.
2.04. Subsidiary Corporation. "Subsidiary Corporation" shall mean
any present or future corporation which (i) would be a "subsidiary corporation"
of PCSS as that term is defined in Section 424 of the Code and (ii) is
designated as a participant in the Plan by the Committee.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01. Initial Eligibility. Any employee who has been employed by the
Company continuously since December 31, 1995, or, if not so employed, who
shall have completed one year of employment and shall be employed by the
Company on the date his participation in the Plan is to become effective, other
than any employee who is, or has been within the preceding one-year period,
both a member of the Board of Directors of the Company and an officer of the
Company or an important Subsidiary Corporation, shall be eligible to
participate in Stock Purchase Periods under the Plan which commence on or after
such one-year period has concluded. Notwithstanding the foregoing, the
Committee shall have the right to waive the requirement of employment since
December 31, 1995 or for a one-year period prior to the effective date of
participation in the Plan in any particular case.
3.02. Leave of Absence. For purposes of participation in the Plan, a
person on leave of absence shall be deemed to be an employee for the first 90
days of such leave of absence and such employee's employment shall be deemed to
have terminated at the close of business on the 90th day of such leave of
absence unless such employee shall have returned to regular full-time or
part-time employment (as the case may be) prior
<PAGE> 2
to the close of business on such 90th day. Termination by the Company of any
employee's leave of absence, other than termination of such leave of absence on
return to full time or part time employment, shall terminate an employee's
employment for all purposes of the Plan and shall terminate such employee's
participation in the Plan and right to exercise any option.
3.03. Restrictions on Participation. Notwithstanding any provisions
of the Plan to the contrary, no employee shall be granted an option to
participate in the Plan:
(a) if, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock,
possessing 5 percent or more of the total combined voting
power or value of all classes of stock of the Company or any
Subsidiary Corporation (for purposes of this paragraph, the
rules of Section 424(d) of the Code shall apply in determining
stock ownership of any employee); or
(b) which permits his rights to purchase stock under all employee
stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the stock (determined
at the time such option is granted) for each calendar year in
which such option is outstanding.
3.04. Commencement of Participation. An eligible employee may become
a participant by completing an authorization for a payroll deduction on the
form provided by the Company and filing it with the office of the Controller of
the Company on or before the date set therefor by the Committee. Payroll
deductions for a participant shall commence when his authorization for a
payroll deduction becomes effective and shall end on the Termination Date of
the Stock Purchase Period to which such authorization is applicable unless
sooner terminated by the participant as provided in Article VIII.
ARTICLE IV
STOCK PURCHASE PERIODS
4.01. Stock Purchase Periods. The Plan will be implemented by such
number of offers to purchase the Company's Common Stock as the Committee shall
determine, each beginning on such date as the Committee shall determine and
continuing for so long as the Committee shall determine, but in no event longer
than 24 months (such periods being referred to herein as "Stock Purchase
Periods"). As used in the Plan, "Commencement Date" means the date on which
the particular Stock Purchase Period begins, and "Termination Date" means the
date on which the particular Stock Purchase Period terminates.
ARTICLE V
PAYROLL DEDUCTIONS
5.01. Amount of Deduction. At the time a participant files his
authorization for payroll deduction, he shall elect the number of shares of
Common Stock that he wishes to purchase, up to the number offered to him for
the particular Stock Purchase Period. The Company will deduct the purchase
price of the number of shares that each participant elects to purchase from the
participant's paychecks in equal amounts for each pay period between the
election to purchase and the applicable Termination Date.
5.02. Participant's Account. All payroll deductions made for a
participant shall be credited to his account under the Plan. A participant may
not make any separate cash payment into such account except when on leave of
absence and then only as provided in Section 5.04. The Company shall provide
quarterly statements of account balances to each participant.
2
<PAGE> 3
5.03. Changes in Payroll Deductions. A participant may discontinue
his participation in the Plan as provided in Article VIII, but no other change
can be made during an Stock Purchase Period and, specifically, a participant
may not alter the amount of his payroll deductions for that Stock Purchase
Period.
5.04. Leave of Absence. If a participant goes on a leave of absence,
such participant shall have the right to elect: (a) to withdraw the balance in
his or her account pursuant to Section 7.03, (b) to discontinue contributions
to the Plan but remain a participant in the Plan, or (c) to remain a
participant in the Plan during such leave of absence, authorizing deductions to
be made from payments by the Company to the participant during such leave of
absence and undertaking to make cash payments to the Plan at the end of each
payroll period to the extent that amounts payable by the Company to such
participant are insufficient to meet such participant's authorized Plan
deductions.
ARTICLE VI
GRANTING OF OPTION
6.01. Number of Option Shares. On the Commencement Date of each
Stock Purchase Period, each participating employee shall be deemed to have been
granted an option to purchase a maximum number of shares of the stock of the
Company equal to a certain percentage of the employee's base pay during the
period of the Stock Purchase Period, divided by the option price of the stock
of the Company for such Stock Purchase Period determined as provided in Section
6.02 below. The applicable percentage of base pay shall be determined by the
Committee with respect to each Stock Purchase Period and may vary from one
Stock Purchase Period to another, but shall in no event exceed 10 percent. An
employee's base pay during a Stock Purchase Period shall be determined by
multiplying his normal weekly rate of pay (as in effect on the last day prior
to the Commencement Date of the particular Stock Purchase Period) by 52 or the
hourly rate by 2,080, provided that, in the case of a part time hourly
employee, the employee's base pay during a Stock Purchase Period shall be
determined by multiplying such employee's hourly rate by the number of
regularly scheduled hours of work for such employee during such Stock Purchase
Period.
6.02. Option Price. The option price of stock purchased with payroll
deductions made during such Stock Purchase Period for a participant therein
shall be such price as the Committee shall determine; provided, however, that
such price shall not be lower than 85 percent of the mean of the bid and asked
prices of the stock on the Commencement Date or the nearest prior business day
on which trading occurred on the Nasdaq National Market System. If the Common
Stock of the Company is not admitted to trading on the aforesaid date for which
the closing price of the stock is to be determined, then reference shall be
made to the fair market value of the stock on that date, as determined on such
basis as shall be established or specified for the purpose by the Committee.
ARTICLE VII
EXERCISE OF OPTION
7.01. Automatic Exercise. Unless a participant gives written notice
to the Company as hereinafter provided, his option for the purchase of stock
with payroll deductions made during any Stock Purchase Period will be deemed to
have been exercised automatically on the Termination Date applicable to such
period, for the purchase of the number of full shares of stock which the
accumulated payroll deductions in his account at that time will purchase at the
applicable option price (but not in excess of the number of shares for which
options have been granted to the employee pursuant to Section 6.01), and any
excess funds in his account at that time will be returned to him.
7.02. Early Exercise. At any time after the determination of the
option price for a given Stock Purchase Period and prior to the applicable
Termination Date, a participant may, by written notice to the
3
<PAGE> 4
Company, elect to exercise all or any part of the options granted to such
participant in such Stock Purchase Period. In the event of such an exercise,
the purchase price for the Common Stock purchased pursuant thereto shall be
paid first out of the participant's accumulated payroll deductions, with any
balance payable by the participant. If a participant pays any portion of the
option price in a manner other than by payroll deduction, the payroll
deductions scheduled to be made with respect to such participant for the period
after the early exercise by the participant and prior to the Termination Date
shall be reduced ratably by the amount of the participant's payment by such
other means in connection with the early exercise of the participant's option.
7.03. Withdrawal of Account. By written notice to the Controller of
the Company, at any time prior to the Termination Date applicable to any Stock
Purchase Period, a participant may elect to withdraw all or any part of the
accumulated payroll deductions in his account at such time. In the case of a
participant's withdrawal of a portion of the payroll deductions credited to his
account under the Plan, the funds remaining in his account on the Termination
Date shall be applied to purchase stock as provided in Section 7.01.
7.04. Fractional Shares. Fractional shares will not be issued under
the Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be returned to any employee promptly following
the termination of an Stock Purchase Period, without interest.
7.05. Transferability of Option. During a participant's lifetime,
options held by such participant shall be exercisable only by that participant.
7.06. Delivery of Stock. As promptly as practicable after the
Termination Date of each Stock Purchase Period, the Company will deliver to
each participant, as appropriate, the stock purchased upon exercise of his
option.
ARTICLE VIII
WITHDRAWAL
8.01. In General. As indicated in Section 7.03, a participant may
withdraw payroll deductions credited to his account under the Plan at any time
by giving written notice to the Controller of the Company. All of the
participant's payroll deductions credited to his account, or such part as is
indicated in the written notice from the participant, will be paid to him
promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Stock Purchase Period. The
Company may, at its option, treat any attempt to borrow by an employee on the
security of his accumulated payroll deductions as an election, under Section
7.03, to withdraw such deductions.
8.02. Effect on Subsequent Participation. A participant's withdrawal
from any Stock Purchase Period will not have any effect upon his eligibility to
participate in any succeeding Stock Purchase Period or in any similar plan
which may hereinafter be adopted by the Company.
8.03. Termination of Employment. Upon termination of the
participant's employment for any reason, including retirement (but excluding
death while in the employ of the Company or continuation of a leave of absence
for a period beyond 90 days), then, unless the period during which options may
be exercised is extended beyond termination of employment by the Committee in
any particular case, which extension shall in no event be for more than 90 days
after termination of employment, the payroll deductions credited to his account
will be returned to him, or, in the case of his death subsequent to the
termination of his employment, to the person or persons entitled thereto under
Section 12.01.
4
<PAGE> 5
8.04. Termination of Employment Due to Death. Upon termination of
the participant's employment because of his death, his beneficiary (as defined
in Section 12.01) shall have the right to elect, by written notice given to the
Controller of the Company prior to the earlier of the Termination Date or the
expiration of a period of sixty (60) days commencing with the date of the death
of the participant, either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) to exercise the participant's option for the purchase of stock
on the Termination Date next following the date of the
participant's death for the purchase of the number of full
shares of stock which the accumulated payroll deductions in
the participant's account at the date of the participant's
death will purchase at the applicable option price, and any
excess in such account will be returned to said beneficiary,
without interest.
In the event that no such written notice of election shall be duly received by
the office of the Controller of the Company, the beneficiary shall
automatically be deemed to have elected, pursuant to paragraph (a), to withdraw
all amounts in the participant's account.
8.05. Leave of Absence. A participant on leave of absence shall,
subject to the election made by such participant pursuant to Section 5.04,
continue to be a participant in the Plan so long as such participant is on
continuous leave of absence. A participant who has been on leave of absence
for more than 90 days and who therefore is not an employee for the purpose of
the Plan shall not be entitled to participate in any Stock Purchase Period
commencing after the 90th day of such leave of absence. Notwithstanding any
other provisions of the Plan, unless a participant on leave of absence returns
to regular full time or part time employment with the Company at the earlier
of: (a) the termination of such leave of absence or (b) three months from the
90th day of such leave of absence, such participant's participation in the Plan
shall terminate on whichever of such dates first occurs.
ARTICLE IX
INTEREST
9.01. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.
ARTICLE X
STOCK
10.01. Maximum Shares. The maximum number of shares which shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 12.04, shall not exceed the number of shares
set forth in Section 1.01 hereof.
10.02. Participant's Interest in Option Stock. The participant will
have no interest in stock covered by his option until such option has been
exercised.
10.03. Registration of Stock. Stock to be delivered to a participant
under the Plan will be registered in the name of the participant.
10.04. Restrictions on Exercise. The Committee may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall
have been duly listed, upon official notice of issuance, upon a stock exchange,
and that either:
5
<PAGE> 6
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company,
that it is his intention to purchase the shares for investment
and not for resale or distribution.
10.05 Restriction on Transfer of Stock. Any shares of Common Stock
issued pursuant to the exercise of options granted under the Plan shall not be
transferable by the participant, other than by will or the laws of descent and
distribution, for the longer of (i) one year following the transfer of such
stock to the participant or (ii) two years after the Commencement Date on which
the options to purchase such shares were granted. Every certificate evidencing
stock subject to the foregoing restriction shall bear a legend reflecting such
restriction.
ARTICLE XI
ADMINISTRATION
11.01. Appointment of Committee. The Stock Option Committee of the
Board of Directors, as composed from time to time, shall be the committee (the
"Committee") that administers the Plan. No member of the Committee shall be
eligible to purchase stock under the Plan.
11.02. Authority of Committee. Subject to the express provisions of
the Plan, the Committee shall have plenary authority in its discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be conclusive.
11.03. Rules Governing the Administration of the Committee. The
Committee may select one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem advisable and may hold
telephonic meetings. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members.
The Committee may correct any defect or omission or reconcile any inconsistency
in the Plan, in the manner and to the extent it shall deem desirable. Any
decision or determination reduced to writing and signed by a majority of the
members of the Committee shall be as fully effective as if it had been made by
a majority vote at a meeting duly called and held. The Committee may appoint a
secretary and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.
ARTICLE XII
MISCELLANEOUS
12.01. Designation of Beneficiary. A participant may file a written
designation of a beneficiary who is to receive any stock and/or cash. Such
designation of beneficiary may be changed by the participant at any time by
written notice to the Controller of the Company. Upon the death of a
participant and upon receipt by the Company of proof of identity and existence
at the participant's death of a beneficiary validly designated by him under the
Plan, the Company shall deliver such stock and/or cash to such beneficiary. In
the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such stock 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 stock and/or
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cash to the spouse or to any one or more dependents of the participant as the
Company may designate. No beneficiary shall, prior to the death of the
participant by whom he has been designated, acquire any interest in the stock
or cash credited to the participant under the Plan.
12.02. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw all funds in accordance with
Section 7.03.
12.03. Use of Funds. All payroll deductions received or held by the
Company under this Plan may be used by the Company for any corporate purpose
and the Company shall not be obligated to segregate such payroll deductions.
12.04. Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding, the outstanding shares of
Common Stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock
split, reverse stock split or similar transaction, appropriate and
proportionate adjustments may be made by the Committee in the number and/or
kind of shares which are subject to purchase under outstanding options and on
the option exercise price or prices applicable to such outstanding options. In
addition, in any such event, the maximum number of shares that may be offered
under the Plan as set forth in Section 10.01 hereof shall also be
proportionately adjusted. No adjustments shall be made for stock dividends.
For the purposes of this Paragraph, any distribution of shares to shareholders
in an amount aggregating 20 percent or more of the outstanding shares shall be
deemed a stock split and any distributions of shares aggregating less than 20
percent of the outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Termination Date upon the
exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.04 shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities and/or property as to which such holder of such option
might thereafter be entitled to receive.
12.05. Amendment and Termination. The Board of Directors shall have
complete power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the stockholders
of the Corporation (i) increase the maximum number of shares that may be issued
under the Plan (except pursuant to Section 12.04), (ii) amend the requirements
as to the class of employees eligible to purchase stock under the Plan, or
(iii) permit the members of the Committee to purchase stock under the Plan. No
termination, modification, or amendment of the Plan may, without the consent of
an employee then having an option under the Plan to purchase stock, adversely
affect the rights of such employee under such option.
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12.06. Effective Date. The Plan shall become effective as of
February 21, 1996, subject to approval by the holders of the majority of the
Common Stock present and represented at a special or annual meeting of the
shareholders held on or before February 21, 1997. If the Plan is not so
approved, the Plan shall not become effective.
12.07. No Employment Rights. The Plan does not, directly or
indirectly, create any right for the benefit of any employee or class of
employees to purchase any shares under the Plan, or create in any employee or
class of employees any right with respect to continuation of employment by the
Company, and it shall not be deemed to interfere in any way with the Company's
right to terminate, or otherwise modify, an employee's employment at any time.
12.08. Effect of Plan. The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit of, all
successors of each employee participating in the Plan, including, without
limitation, such employee's estate and the executors, administrators or
trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy
or representative of creditors of such employee.
12.09. Governing Law. The law of the State of Texas will govern all
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
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EXHIBIT 5
OPINION OF SAYLES & LIDJI, P.C.
[SAYLES & LIDJI LETTERHEAD]
July 31, 1996
PC Service Source, Inc.
2350 Valley View Lane
Dallas, TX 75234
Re: PC Service Source, Inc. - Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to PC Service Source, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-8 (the "Registration Statement"), filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), relating to 100,000 shares of the common stock,
par value $0.01 per share (the "Common Stock") of the Company that are to be
offered under the PC Service Source, Inc. 1996 Employee Stock Purchase Plan
(the "Plan"), as more fully described in the Registration Statement.
You have requested the opinion of this firm with respect to certain
legal aspects of the proposed offering. In connection therewith, we have
examined and relied upon the original, or copies certified to our satisfaction,
of (1) the Restated Certificate of Incorporation and the Bylaws of the Company,
as amended; (2) minutes and records of the corporate proceedings of the Company
with respect to the establishment of the Plan, the offering of shares of Common
Stock pursuant to the Plan and related matters; (3) the Registration Statement
and exhibits deemed necessary for the expression of opinions herein contained.
In making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies. As to various questions of fact material to
this opinion, and as to the content and form of the Restated Certificate of
Incorporation, the Bylaws, minutes, records, resolutions and other documents or
writings of the Company, we have relied, to the extent we deem reasonably
appropriate, upon representations or certificates of officers or directors of
the Company and upon documents, records and instruments furnished to us by the
Company, without independent check or verification of their accuracy.
Based upon our examination, consideration of, and reliance on the
documents and other matters described above, and subject to the comments and
exceptions noted below, we are of the opinion that the Company presently has
available at least 100,000 shares of authorized but unissued Common Stock
and/or treasury shares from which the 100,000 shares of Common Stock proposed
to be offered under the Plan may be issued. Assuming that the Company
maintains an adequate number of authorized but unissued shares and/or treasury
shares available for issuance to those persons who elect to purchase Common
Stock offered under the Plan, and assuming that the consideration for shares of
Common Stock purchased under the Plan is actually received by the Company as
provided in the Plan and exceeds the par value of such shares, then the shares
of Common Stock issued pursuant to and in accordance with the terms of the Plan
will be duly and validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to references to our firm included in or made a part
of the Registration Statement. In giving this consent,
<PAGE> 2
PC Service Source, Inc.
July 31, 1996
Page 2
we do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act or the Rules and Regulations of
the Securities and Exchange Commission thereunder.
Sincerely,
SAYLES & LIDJI,
A PROFESSIONAL CORPORATION
By: /s/ Brian M. Lidji
-------------------------------
Brian M. Lidji
<PAGE> 1
EXHIBIT 23.2
CONSENT OF KPMG PEAT MARWICK LLP
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
PC Service Source, Inc.:
We consent to incorporation by reference in this Registration
Statement on Form S-8 of PC Service Source, Inc. of our report dated February
15, 1996, relating to the consolidated balance sheets of PC Service Source,
Inc. and subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1995, and the
related schedule, which report appears in the December 31, 1995, annual report
on Form 10-K of PC Service Source, Inc.
KPMG PEAT MARWICK LLP
/s/ KPMG Peat Marwick LLP
Dallas, Texas
July 30, 1996
