MALL » Topics » Spin-Off of

This excerpt taken from the MALL 10-K filed Mar 31, 2005.

Spin-Off of


Our board of directors has approved the spin-off of and has declared a special stock dividend to our stockholders to distribute all of the outstanding shares of 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 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, 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 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 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’s 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 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 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:




our receipt of an opinion from our tax counsel that our contribution of assets to and the distribution, taken together, will qualify as a reorganization pursuant to which no gain or loss will be recognized by us or our stockholders for U.S. federal income tax purposes under Section 355, 368(a)(1)(D) and related provisions of the Internal Revenue Code;




the receipt of any material government approvals and consents necessary to consummate the distribution;




the absence of any event or development that, in the sole judgment of our board of directors, would result in the distribution having a material adverse effect on us or our stockholders; and




the absence of any order, injunction, decree or regulation issued by any court or agency of competition jurisdiction or other legal restraint or prohibitions preventing the consummation of the distribution.


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.


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