This excerpt taken from the MALL 10-K filed Mar 31, 2005.
Spin-Off of eCOST.com
Our board of directors has approved the spin-off of eCOST.com and has declared a special stock dividend to our stockholders to distribute all of the outstanding shares of eCOST.com owned by our company. The special stock dividend is expected to be payable on April 11, 2005 to PC Mall stockholders of record on March 28, 2005. Completion of the distribution is contingent upon the satisfaction or waiver of a variety of conditions described below.
In September 2004, we and eCOST.com entered into a Master Separation and Distribution Agreement and certain other agreements providing for the separation and the distribution, the provision by us of certain interim services to eCOST.com, and addressing employee benefit arrangements, tax and other matters. In March 2005, we amended the Administrative Services Agreement that our subsidiary AF Services, LLC (formerly AF Services, Inc.) entered into with eCOST.com in September 2004, pursuant to which the scope of the services covered by the agreement was reduced and monthly service charges were correspondingly reduced from $101,600 to $19,000, effective as of the date of our spin-off of eCOST.com. For a more detailed discussion of the Master Separation and Distribution Agreement, the Administrative Services Agreement, and the certain other agreements providing for the separation and distribution, you can refer to the information under the heading Certain Relationships and Related Transactions in Part III, Item 13 of this Report. We believe that the separation and distribution will enhance eCOST.coms ability to implement its growth and operating strategies. Upon completion of the distribution, holders of common stock of PC Mall as of the record date of the distribution will be entitled to receive a dividend of eCOST.com common stock without the payment of further consideration, although we expect the market value of shares of our common stock to diminish upon effecting the distribution to reflect the value (per share of our common stock) of the shares of eCOST.com common stock we distribute.
The Master Separation and Distribution Agreement contains various conditions to the distribution that must be satisfied or waived by us, including:
In addition, we have the right not to complete the distribution if, at any time, our board of directors determines, in its sole discretion, that the distribution is not in the best interest of us or our stockholders, or if the distribution has not occurred by December 31, 2005.