its financial statements and to make available to Daisytek and its auditors all
work papers related to the annual audit of our company as well as access to the
personnel who perform the annual audit and our and our subsidiaries' books and
records so that Daisytek and its auditors may conduct reasonable audits relating
to our financial statements. We have also agreed to adhere to certain specified
accounting standards and to notify and consult with Daisytek regarding any
changes to our accounting principles and make any changes to our accounting
estimates and principles requested by Daisytek.
Indemnification. We have generally agreed to indemnify Daisytek and its
affiliates against all liabilities arising out of any material untrue statements
and omissions in this prospectus and the registration statement of which it is a
part and in any and all registration statements, information statements and/or
other documents filed with the SEC in connection with the spin-off or otherwise.
However, our indemnification of Daisytek does not apply to information relating
to Daisytek. Daisytek has agreed to indemnify us for this information.
Expenses. In general, we have agreed to pay all costs and expenses relating
to this offering, including the underwriting discounts and commissions, and
Daisytek has agreed to pay all costs and expenses relating to the spin-off.
REGISTRATION RIGHTS AGREEMENT
In the event the spin-off is not completed and Daisytek does not divest
itself of all of its shares of PFSweb common stock, Daisytek could not freely
sell all of such shares without registration under the Securities Act.
Accordingly, we will enter into a registration rights agreement with Daisytek to
provide it with certain registration rights relating to the shares of our common
stock which it holds. These registration rights generally become effective at
such time as Daisytek informs us that it no longer intends to or complete the
Shares Covered. The registration rights agreement covers those shares of
our common stock that are held by Daisytek immediately following this offering
and continue to be held by Daisytek on the date on which Daisytek notifies us
that it no longer intends to complete the spin-off.
Demand Registrations. Daisytek may request registration (each, a "Demand
Registration") under the Securities Act of all or any portion of our shares
covered by the registration rights agreement and we will be obligated to
register such shares as requested by Daisytek. There is no limit to the number
of Demand Registrations that Daisytek may request, except that the number of
shares to be registered must have an aggregate expected offering price of at
least $10 million.
Terms of Each Offering. Daisytek will designate the terms of each offering
effected pursuant to a Demand Registration, which may take any form, including
an underwritten public offering, a shelf registration, or a registration in
connection with an exchange offer or other distribution.
Timing of Demand Registrations. We are not required to undertake a Demand
Registration within 90 days of the effective date of a previous Demand
Registration, other than a Demand Registration that was effected as a shelf
registration. Also, we have the right to postpone the filing or effectiveness of
any Demand Registration for up to 90 days if in the reasonable judgment of our
counsel such registration would reasonably be expected to have a material
adverse effect on any of our existing proposals or plans to engage in certain
material transactions; provided, however, that we may exercise this right only
once in any 12-month period.
Priority on Demand Registrations. We and other parties can participate in
any Demand Registration only if all of the securities Daisytek proposes to
include in such registration are so included.
Piggyback Registrations. The registration rights agreement also provides
for "piggyback" registration rights for Daisytek. Whenever we propose to
register any of our securities under the Securities Act for ourselves or others,
subject to certain customary exceptions, we must provide