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substantially the same as the terms and conditions of the eligible options
tendered for exchange. All of the new options will be issued as nonqualified
stock options and may or may not be issued under the 1999 Plan, as we determine
at the time of grant; provided, however, that whether or not issued under the
1999 Plan, all of the new options will be subject to all of the terms and
provisions of the 1999 Plan as if issued thereunder. A summary description of
the 1999 Plan is set forth below. For more details regarding the terms of
options issued under the 1999 Plan, please review the copy of the 1999 Plan
previously provided to you. If you have any questions regarding the 1999 Plan,
or would like an additional copy of the 1999 Plan, please contact Harvey Achatz,
Vice President-Administration, PFSweb, Inc., 500 North Central Expressway,
Plano, Texas 75074 (888-330-5504 x 2130) (hachatz@pfsweb.com).
Exercise Price. The exercise price of the new options to be granted
pursuant to the offer will equal the fair market value of our common stock on
the date prior to the date of grant. Our common stock is currently traded on the
Nasdaq National Market and the exercise price of the new options will equal the
last reported sale price of our common stock on the Nasdaq National Market on or
about the date which is the first business day following the date which is six
months and one day from the expiration date of the offer. If our common stock is
not traded on Nasdaq National Market, but is traded in the over-the-counter
market, the exercise price of the new options will be the mean between the
closing representative bid and asked prices on such date. SINCE WE WILL NOT
GRANT NEW OPTIONS UNTIL AT LEAST SIX MONTHS AND ONE DAY AFTER THE DATE WE CANCEL
THE OPTIONS ACCEPTED FOR EXCHANGE, IT IS POSSIBLE THAT THE NEW OPTIONS MAY HAVE
A HIGHER EXERCISE PRICE THAN SOME OR ALL OF YOUR CURRENT OPTIONS. WE RECOMMEND
THAT YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR COMMON STOCK BEFORE DECIDING
WHETHER TO TENDER YOUR OPTIONS.
Vesting and Exercise. Each new option issued in exchange for options
issued under a Plan will be fully vested as to 75% of the shares subject
thereto, and the remaining 25% will have a one year quarterly vesting schedule
beginning on the date of issuance of the new option. Each new option issued in
exchange for Conversion Options will not be vested on the date of issuance and
will have a new one year quarterly vesting schedule beginning on the date of the
issuance of the new options. Each new option will have a ten-year term from the
date of issuance.
Termination of Employment. IF YOU ARE NOT A U.S. EMPLOYEE OR DIRECTOR
OF PFSWEB OR ONE OF OUR SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS THROUGH
THE DATE WE GRANT THE NEW OPTIONS, YOU WILL NOT RECEIVE ANY NEW OPTIONS OR ANY
OTHER CONSIDERATION IN EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN
ACCEPTED FOR EXCHANGE. This means that if you die, quit or we terminate your
employment or service as a director prior to the date we grant the new options,
you will not receive anything for your cancelled options that you tendered.