PFSWEB, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

purchase shares under the employee stock option agreements typically vest over a three-year period, one-twelfth each quarter. Stock options must be exercised within 10 years from the date of grant. Stock options are generally issued such that the exercise price is equal to the market value of the Company’s common stock at the date of grant.

     As of December 31, 2007, there were 2,484,947 shares available for future grants under the Stock Option Plans.

     The following table summarizes stock option activity under the Stock Option Plans:

														Weighted
										Weighted				Average
										Average				Remaining				Aggregate
										Exercise				Contractual				Intrinsic
		Shares				Price Per Share_				Price				Life				Value
Outstanding, December 31, 2006			5,467,448			$	0.39—$16.00			$	1.30
Granted			612,000			$	0.94—$1.04			$	0.94
Exercised			—				—				—
Canceled			(398,750	)		$	0.80—$5.78			$	1.44
Outstanding, December 31, 2007			5,680,698			$	0.39—$16.00			$	1.25
Exercisable, December 31, 2007			4,943,609			$	0.39—$16.00			$	1.25				4.9			$	1,396,033
Exercisable and expected to vest, December 31, 2007			5,560,475			$	0.39—$16.00			$	1.41				4.7			$	1,518,434

     The weighted average fair value per share of options granted during the years ended December 31, 2007, 2006 and 2005 was $0.71, $1.13 and $2.07, respectively. The total intrinsic value of options exercised under the Stock Option Plans was $0.02 million and $0.2 million during the years ended December 31, 2006 and 2005, respectively.

PFSweb Non-plan Options

     Prior to the Company’s initial public offering, certain of the Company’s employees were holders of stock options of the Company’s former parent company, Daisytek International Corporation (“Daisytek”), issued under Daisytek’s stock option plans.

     In connection with the completion of the Company’s spin-off from Daisytek on July 6, 2000 (the “Spin-off”), all outstanding Daisytek stock options were replaced with substitute stock options. Daisytek options held by PFSweb employees were replaced (at the option holder’s election made prior to the Spin-off) with either options to acquire shares of PFSweb common stock or options to acquire shares of both Daisytek common stock and PFSweb common stock (which may be exercised separately) (the “Unstapled Options”). Options held by Daisytek employees were replaced (at the option holder’s election made prior to the Spin-off) with either options to acquire shares of Daisytek common stock or Unstapled Options.

     As a result of the stock option replacement process described above, in conjunction with the Spin-off, PFSweb stock options (the “Non-plan Options”) were issued to PFSweb and Daisytek officers, directors and employees. These options were issued as one-time grants and were not issued under the Stock Option Plans. The terms and provisions of the Non-plan Options are substantially the same as options issued under the Stock Option Plans.

     The following table summarizes stock option activity under the Non-plan Options:

														Weighted
										Weighted				Average
										Average				Remaining				Aggregate
										Exercise				Contractual				Intrinsic
		Shares				Price Per Share				Price				Life				Value
Outstanding, December 31, 2006			433,030			$	0.91—$10.58			$	0.95
Granted			—			$	—			$	—
Exercised			—			$	—			$	—
Canceled			(3,811	)		$	0.91—$5.78			$	1.95
Outstanding, December 31, 2007			429,019			$	0.91—$10.58			$	0.94				3.9			$	145,542
Exercisable, December 31, 2007			429,219			$	0.91—$10.58			$	0.94				3.9			$	145,542