To: PFSweb employees who are eligible option holders
From : Mark C. Layton / Chairman, CEO and Sr. Partner of PFSweb, Inc.
Date : April 30, 2001
I write to you today with exciting news. Please take a moment to
carefully read this letter and the attached documents pertaining to your stock
options to purchase PFSweb, Inc. shares.
It would be quite an understatement to say that the last 18 months has
been a wild ride at PFSweb, Inc. Between the huge downturn in the NASDAQ market
and the change in focus at PFSweb resulting from the dot.com meltdown, our share
price has taken quite a beating. As I have said many times, there is no one less
happy than I about the way the events of this past 18 months have affected
shareholder value. But I remain bullish about the future for PFSweb, and I
believe that shareholders with a longer-term vision, who have capitalized on the
price of PFSweb shares today, will be rewarded.
This letter is to inform you that the PFSweb, Inc. board of directors
has elected to take action to make adjustments in certain outstanding PFSweb
options. The attached document explains the adjustment(s) that will affect you
in full detail and I encourage you to read it thoroughly. In short, as a current
U.S. PFSweb employee who holds PFSweb options, you are being offered the
opportunity to exchange all of your current options that have a strike price
above $4 per share for the same number of new options that we expect to grant to
you on or about December 3, 2001 with a strike price determined by the market
price at that time.
This exchange methodology has certain inherent risks that you should
make yourself familiar with. However, considering that most PFSweb options are
well "out of the money," the downside risks of this exchange are generally
mitigated. In any case, please read the attached materials and see your area
Partner or Harvey Achatz if you have any questions at all. The exchange
methodology is somewhat complex, but highly beneficial for the company and the
option holder. This exchange method avoids the potential of having the company
record significant compensation charges that are normally incurred when an
option strike price is lowered for an existing employee.
Note: In order to receive the new options, you must continue your
employment at PFSweb through the new grant date in December. You will not
receive any new options if your employment terminates before that date, for any
or no reason. Further, your participation in this action is voluntary and by no
means are you required to accept this offer to exchange.
We believe that taking this action will help insure that we retain the
experienced professionals that are an essential part of developing world class
outsourcing solutions at PFSweb today. The board is taking this action so that
our team of professionals have appropriate incentives to remain with PFSweb and
to continue to drive the future of this company and to be appropriately rewarded
for their efforts. Further, shareholders of PFSweb stock today want to