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stock that it owns to the holders of Daisytek's common stock. Any shares
distributed by Daisytek will be eligible for immediate resale in the public
market without restrictions by persons other than Affiliates of PFSweb.
Affiliates of PFSweb would be subject to the restrictions of Rule 144 described
above other than the one-year holding period requirement.
Each of PFSweb, Daisytek and the directors and executive officers of PFSweb
and Daisytek have agreed that, without the prior written consent of Hambrecht &
Quist on behalf of the underwriters, they will not, during the period ending 180
days after the date of this prospectus, sell or otherwise dispose of any shares
of our common stock, subject to certain exceptions. The spin-off is specifically
not exempted from this agreement. See "Underwriters."
An aggregate of 6,000,000 shares of our common stock are reserved for
issuance under our stock option plans. We intend to file a registration
statement on Form S-8 covering the issuance of shares of our common stock
pursuant to these plans. Accordingly, the shares issued pursuant to these stock
option plans will be freely tradable, subject to the restrictions on resale by
Affiliates under Rule 144.
REGISTRATION RIGHTS OF DAISYTEK
Pursuant to the Registration Rights Agreement we will enter into with
Daisytek, at any time after Daisytek informs us that it no longer intends to
complete the spin-off or that the spin-off was completed without Daisytek
divesting itself of 100% of our common stock that it held, Daisytek may require
us to register under the Securities Act all or any portion of our common stock
that it holds. Any of Daisytek's shares of our common stock registered pursuant
to the Registration Rights Agreement would be eligible for immediate resale in
the public market without restrictions by persons other than Affiliates of
PFSweb. For more information regarding the Registration Rights Agreement, see
"Registration Rights Agreement."
Any sales of substantial amounts of our common stock in the public market,
or the perception that such sales might occur (whether as a result of the
spin-off, Daisytek's registration rights or otherwise), could have a material
adverse effect on the market price of our common stock. See "Risk Factors."
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