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of shares to be issued under the Plan and any outstanding options. Unless
terminated earlier, the Plan will terminate ten years from its adoption, and no
stock options will be granted after the Plan terminates. Our board of directors
or the Stock Option Committee has the authority to amend, modify, suspend or
terminate the Plan at any time, subject to any requirement of stockholder
approval under the Code or other applicable law.
There are currently an aggregate of 1,201,500 options outstanding under the
Employee Stock Option Plan that are held by an aggregate of 193 officers and
employees. All of these options have a weighted average exercise price of $10.52
per share and are subject to a three year vesting schedule, under which no
options vest for three years, subject to acceleration, in part, upon completion
of the spin-off. The following table sets forth information with respect to
grants of stock options under the Employee Stock Option Plan to the named
executive officers reflected in the Summary Compensation Table.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------ VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERMS(1)
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED YEAR SHARE DATE 5% 10%
---- ---------- ---------- --------- ---------- -------- ----------
Mark C. Layton....... 90,000 7.5% $10.45 7-1-09 $591,475 $1,498,915
Christopher Yates.... 85,000 7.1 10.45 7-1-09 558,616 1,415,642
Steven S. Graham..... 75,000 6.2 10.45 7-1-09 492,896 1,249,096
Thomas J. Madden..... 85,000 7.1 10.45 7-1-09 558,616 1,415,642
C. Clifford Defee.... 80,000 6.7 10.45 7-1-09 525,756 1,332,369
-------------------------
(1) These are hypothetical values using assumed annual rates of stock price
appreciation as prescribed by the rules of the SEC.
Substitute Stock Options
In connection with the completion of the spin-off, all Daisytek stock
options held by Daisytek employees who are transferred to PFSweb will be
replaced with options to acquire a number of shares of our common stock equal to
the number of shares of Daisytek common stock subject to such Daisytek stock
option as of the date of the completion of the spin-off, multiplied by the Ratio
described below, rounded down to the nearest whole share. The per share exercise
price of such replaced stock option will equal the per share exercise price of
such Daisytek stock option divided by the Ratio.
The "Ratio" means the amount determined by dividing:
- the average of the daily high and low per share prices of the Daisytek
common stock, as reported in The Wall Street Journal, during the three
trading days ending on the record date established by the Daisytek Board
of Directors for the spin-off; by
- the average of the daily high and low per share prices of the PFSweb
common stock, as reported by The Wall Street Journal, for the three
trading days commencing on the day after such record date.
Substantially all of the other terms and conditions of each substitute
stock option, including the time or times when, and the manner in which, each
option will be exercisable, the duration of the exercise period, the permitted
method of exercise, settlement and payment, the rules that will apply in the
event of the termination of employment of the employee, the events, if any, that
may give rise to an employee's right to accelerate the vesting or the time or
exercise thereof and the vesting provisions, will be the same as those of the
replaced Daisytek stock option.
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