Sample Business Contracts


Stock Option Agreement - PFSweb Inc. and Mark C. Layton


                             STOCK OPTION AGREEMENT

                  THIS AGREEMENT is made by and between PFSWEB, INC., a Delaware
corporation (hereinafter referred to as "COMPANY") and the individual whose name
and signature appear on the signature page hereof (hereinafter referred to as
"HOLDER"):

                  WHEREAS, the Company wishes to evidence the issuance to the
Holder of the Options set forth herein; and

                  WHEREAS, in addition to the terms and provisions set forth
herein, this Option shall be subject to, and governed in accordance with, the
terms and provisions of the Company's Stock Option Plan (the "PLAN") (the terms
of which are hereby incorporated by reference and made a part of this
Agreement);

                  NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:

I. DEFINITIONS

                  Except as otherwise defined herein, terms defined in the Plan
shall have the same meaning when used herein.

II. GRANT OF OPTION

                  2.1 GRANT OF OPTION. For good and valuable consideration,
effective as of the date set forth on the signature page hereof as the "Date of
Grant" (the "DATE OF GRANT"), the Company hereby grants to the Holder the option
to purchase any part or all of the number of shares of the Company's Common
Stock, $.001 par value (the "COMMON STOCK") set forth on the signature page
hereof, subject to and upon the terms and conditions set forth in the Plan and
this Agreement.

                  2.2 PURCHASE PRICE. The purchase price per share of the shares
of Common Stock covered by the Option shall be the Purchase Price set forth on
the signature page hereof, without commission or other charge.

                  2.3 CONSIDERATION TO COMPANY. In consideration of the granting
of this Option by the Company, the Holder agrees to render faithful and
efficient services to the Company, a Parent Corporation or a Subsidiary, with
such duties and responsibilities as the Company shall from time to time
prescribe. Nothing in this Agreement or in the Plan shall confer upon the Holder
any right to continue in the employ of the Company, any Parent Corporation or
any Subsidiary or shall interfere with or restrict in any way the rights of the
Company, its Parent Corporation and its Subsidiaries, which are hereby expressly
reserved, to discharge the Holder at any time for any reason whatsoever, with or
without cause.

<PAGE>

                  2.4 ADJUSTMENTS IN OPTION. In the event that the outstanding
shares of Common Stock subject to the Option are increased, decreased, changed
into or exchanged for a different number or kind of shares of the Company or
other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split up, spin-off, stock dividend or
combination of shares or other recapitalization or reorganization, the Committee
shall make an appropriate and equitable adjustment in the number and kind of
shares as to which the Option, or portions thereof then unexercised, shall be
exercisable. Such adjustment in the Option shall be made without change in the
total price applicable to the unexercised portion of the Option (except for any
change in the aggregate price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in the Option price per
share. Any such adjustment made by the Committee shall be final and binding upon
the Holder, the Company and all other interested persons.

                  2.5 NON-QUALIFIED STOCK OPTION. This Option shall be deemed a
non-qualified stock option under the Code.

III. PERIOD OF EXERCISABILITY

                  3.1      COMMENCEMENT OF EXERCISABILITY.

                           (a) Except as otherwise set forth in any authorized
appendix to the signature page hereto, the Option shall vest and become
exercisable as follows:

                           (i) on the Date of Grant, the Option shall not be
vested and shall not be exercisable as to any of the Shares subject hereto;

                           (ii) on the 91st day from the Date of Grant, the
Option shall be fully vested and exercisable as to 25% of the original Shares
subject hereto;

                           (iii) on the 181st day from the Date of Grant, the
Option shall be fully vested and exercisable as to an additional 25% of the
original Shares subject hereto;

                           (iv) on the 271st day from the Date of Grant, the
Option shall be fully vested and exercisable as to an additional 25% of the
original Shares subject hereto; and

                           (v) on the date which is one year from the Date of
Grant, the Options shall be fully vested and exercisable as to all of the
original Shares subject hereto.

                           (b) Except as otherwise set forth in the Plan, no
portion of the Option which is unexercisable at Termination of Employment shall
thereafter become exercisable.

                  3.2 DURATION OF EXERCISABILITY. The installments provided for
in Section 3.1 are cumulative. Each such installment which becomes exercisable
pursuant to Section 3.1 shall remain exercisable until it becomes unexercisable
under Section 3.3.



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<PAGE>

                  3.3 EXPIRATION OF OPTION. Subject to the terms and provisions
of the Plan, the Option may not be exercised to any extent by anyone after the
first to occur of the following events:

                           (i) The expiration of ten (10) years from the Date of
Grant;

                           (ii) The date of the Holder's Termination of
Employment for any reason, other than death or disability (within the meaning of
Section 22(e)(3) of the Code), unless the Committee otherwise elects to permit
the exercise of such Option for a period of time thereafter; provided, however
(a) such period of time shall end no later than ten years from the Date of
Grant, and (b) the Committee may make such elections in such manner as it deems
appropriate, which may be non-uniform and selective, and based upon such factors
as it deems relevant;

                           (iii) With respect to an Option held by an Holder who
is disabled (within the meaning of Section 22(e)(3) of the Code), the expiration
of one year from the date of the Holder's Termination of Employment for any
reason other than death, unless the Holder dies within said one-year period;

                           (iv) The expiration of one year from the date of the
Holder's death with respect to all Options held by such Holder; and

                           (v) With respect to all Options, and notwithstanding
any other provision contained herein, the date of the Holder's Termination of
Employment in the event such Termination is for "cause".

                  3.4 ACCELERATION OF EXERCISABILITY. In the event of the merger
or consolidation of the Company with or into another corporation, or the
acquisition by another corporation or person of all or substantially all of the
Company's assets or eighty percent (80%) or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company, the
Committee may, in its absolute discretion and upon such terms and conditions as
it deems appropriate, provide by resolution, adopted prior to such event, that
at some time prior to the effective date of such event this Option shall be
exercisable as to all or a portion of the shares covered hereby, notwithstanding
that this Option may not yet have become fully exercisable under Section 3.1(a);
provided, however, that the Committee may, in its sole discretion, forego such
acceleration of exercisability if:

                           (i) This Option becomes unexercisable under Section
3.3 prior to said effective date; or

                           (ii) In connection with such an event, provision is
made for an assumption of this Option or a substitution therefor of a new option
by an employer corporation or a parent or subsidiary of such corporation, so
that such assumption or substitution complies with the provisions of Section
424(a) of the Code.



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<PAGE>

                           The Committee may make such determinations and adopt
such rules and conditions as it, in its absolute discretion, deems appropriate
in connection with such acceleration of exercisability, including, but not by
way of limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction, and determinations regarding whether provisions for
assumption or substitution have been made as defined in clause (ii) above.

IV. EXERCISE OF OPTION

                  4.1 PERSON ELIGIBLE TO EXERCISE. During the lifetime of the
Holder, only he or she may exercise the Option or any portion thereof. After the
death of the Holder, any exercisable portion of the Option may, prior to the
time when the Option becomes unexercisable under Section 3.3, be exercised by
his or her personal representative or by any person empowered to do so under the
Holder's will or under the then applicable laws of descent and distribution.
Notwithstanding the foregoing, the Committee may, in its sole discretion, permit
the transfer of this Option, in whole or in part, and the exercise thereof by
any transferee thereof.

                  4.2 PARTIAL EXERCISE. Any exercisable portion of the Option or
the entire Option, if then wholly exercisable, may be exercised in whole or in
part at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3; provided, however, that each partial exercise
shall be for not less than one-hundred (100) shares (or the minimum installment
set forth in Section 3.1, if a smaller number of shares) and shall be for whole
shares only.

                  4.3 MANNER OF EXERCISE. The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary or his office of
all of the following (except as otherwise waived by such officer) prior to the
time when the Option or such portion becomes unexercisable under Section 3.3:

                           (a) Notice in writing signed by the Holder or the
other person then entitled to exercise the Option or portion, stating that the
Option or portion is thereby exercised, such notice complying with all
applicable rules established by the Committee; and

                           (b) (i) Full payment (in cash or by check) for the
shares with respect to which such Option or portion is exercised; or

                                    (ii) With the consent of the Committee, (A)
shares of the Company's Common Stock owned by the Holder duly endorsed for
transfer to the Company or (B) subject to the requirements of Section 5.4 of the
Plan, shares of the Company's Common Stock issuable to the Holder upon exercise
of the Option, in each case, with a fair market value (as determined under
Section 4.2(b) of the Plan) on the date of Option exercise equal to the
aggregate Option price of the shares with respect to which such Option or
portion is thereby exercised; or



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<PAGE>

                                    (iii) With the consent of the Committee, a
promissory note duly executed and delivered by the Holder in the principal
amount of the exercise price thereof, or any portion thereof, in each case upon
such terms and conditions (including without limitation, terms regarding rates
of interest, payment schedule, collateral or other security) as the Committee
may establish in its sole and absolute discretion; or

                                    (iv) With the consent of the Committee, any
combination of the consideration provided in the foregoing subsections (i), (ii)
and (iii);

                           (c) A bona fide written representation and agreement,
in a form satisfactory to the Committee, signed by the Holder or other person
then entitled to exercise such Option or portion, stating that the shares of
stock are being acquired for his own account, for investment and without any
present intention of distributing or reselling said shares or any of them except
as may be permitted under the Securities Act and then applicable rules and
regulations thereunder, and that the Holder or other person then entitled to
exercise such Option or portion will indemnify the Company against, and hold it
free and harmless from, any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is contrary to
the representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired upon exercise of an
Option does not violate the Securities Act, and may issue stop-transfer orders
covering such shares. Share certificates evidencing stock issued on exercise of
this Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares; and

                           (d) Full payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; provided, however, with the
consent of the Committee, any combination of the consideration provided in the
foregoing subsections (i), (ii) and (iii) of the preceding paragraph (b) may be
used to make all or part of such payment; and

                           (e) In the event the Option or portion shall be
exercised pursuant to Section 4.1 by any person or persons other than the
Holder, appropriate proof of the right of such person or persons to exercise the
Option.

                  4.4 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The shares
of stock deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares or issued shares which
have then been reacquired by the Company. Such shares shall



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<PAGE>

be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions (except as otherwise waived by the Committee):

                           (a) The admission of such shares to listing on all
stock exchanges on which such class of stock is then listed; and

                           (b) The completion of any registration or other
qualification of such shares under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and

                           (c) The obtaining of any approval or other clearance
from any state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and

                           (d) The payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; and

                           (e) The lapse of such reasonable period of time
following the exercise of the Option as the Committee may from time to time
establish for reasons of administrative convenience.

                  4.5 RIGHTS AS A SHAREHOLDER. The holder of the Option shall
not be, nor have any of the rights or privileges of, a shareholder of the
Company in respect of any shares purchasable upon the exercise of any part of
the Option unless and until certificates representing such shares shall have
been issued by the Company to such holder.

V. OTHER PROVISIONS

                  5.1 ADMINISTRATION. The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon the Holder, the Company and all other interested persons.
No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Option.

                  5.2 OPTION NOT TRANSFERABLE. Neither the Option nor any
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Holder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of



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<PAGE>

law by judgment, levy, attachment, garnishment of any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution. Notwithstanding the foregoing, the Committee may, in its
discretion, permit the holder of this Option to transfer such Option, or any
portion thereof, to such holder's spouse, lineal descendent or trust established
for the benefit thereof or any other person or entity.

                  5.3 SHARES TO BE RESERVED. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of stock as will be sufficient to satisfy the requirements of this Agreement.

                  5.4 NOTICES. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Holder shall be addressed to him or
her at the address given beneath his or her signature hereto. By a notice given
pursuant to this Section 5.4, either party may hereafter designate a different
address for notices to be given to such party. Any notice which is required to
be given to the Holder shall, if the Holder is then deceased, be given to the
Holder's personal representative if such representative has previously informed
the Company of his status and address by written notice under this Section 5.4.
Any notice shall be deemed duly given upon receipt and shall be delivered by
hand, reputable overnight courier or deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.

                  5.5 TITLES. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this
Agreement.

                  5.6 TERMS OF THE PLAN. All of the terms and provisions of the
Plan are incorporated herein by reference as if fully set forth at length
herein, and the Holder acknowledges receipt and review of the Plan. In the event
of any conflict or inconsistency between the Plan and the terms set forth
herein, the same shall be determined and interpreted by the Committee, whose
determination and interpretation shall be final and binding in all respects and
upon all interested persons.

                  5.7 NOTIFICATION OF DISPOSITION. The Holder shall give prompt
notice to the Company of any disposition or other transfer of any shares of
stock acquired upon exercise of this Option if such disposition or transfer is
made (a) within two (2) years from the date of grant of the Option with respect
to such shares so exercised or (b) within one (1) year after the exercise of the
Option with respect to such shares. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in cash, other property,
assumption of indebtedness or other consideration, by the Holder in such
disposition or other transfer.

                                   ***********



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<PAGE>



                           STOCK OPTION SIGNATURE PAGE

         In Witness Whereof, effective as of the Date of Grant, the Company and
the undersigned Holder have executed and delivered this Option.

Date of Grant:                                  December 5, 2001
Name of Holder:                                 Mark C. Layton
Number of Shares:                               180,587
Exercise Price Per Share:                       $0.91
Option Certificate Number:                      NP2-100



HOLDER:                                    PFSWEB, INC.


By:                                        By:
   ---------------------------------          ---------------------------------
   Signature of Holder                        Its: Secretary



-----------------------------------
        Address of Holder



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