EXHIBIT 10.57
TAX ALLOCATION AND
INDEMNIFICATION AGREEMENT
THIS TAX ALLOCATION AND
INDEMNIFICATION AGREEMENT (this “ Agreement ”)
is dated as of September 1, 2004, by and between PC Mall, Inc., a
Delaware corporation (“ PC Mall ”), and
eCOST.com, Inc., a Delaware corporation (“ eCOST
”) (each, individually a “ Party ,” and
collectively, the “ Parties ”).
WHEREAS, PC Mall is the common parent corporation of
various directly and indirectly wholly-owned subsidiaries (the
“ PC Mall Consolidated Group ”) including
eCOST;
WHEREAS, members of the PC Mall Consolidated Group have
heretofore joined in filing consolidated federal and combined
income tax returns;
WHEREAS, the Board of Directors of PC Mall has determined
that it is appropriate, desirable and in the best interests of PC
Mall and its businesses as well as of the holders of PC Mall common
stock, for PC Mall: (i) to contribute or otherwise transfer to
eCOST, and to cause certain of its Affiliates to contribute or
otherwise transfer to eCOST, certain Assets and Liabilities
associated with the eCOST Business as defined in the Master
Separation and Distribution Agreement dated as of the date hereof,
by and between PC Mall and eCOST (the “ Distribution
Agreement ”); (ii) to cause eCOST to make an initial
public offering of its Common Stock, par value $.001 per share (the
“ Offering ”); and (iii) following the
consummation of the Offering, to distribute pro rata to the holders
of the PC Mall Common Stock all of its outstanding shares of common
stock of eCOST (the “ eCOST Common Shares ”) as
set forth in the Distribution Agreement, subject to the
satisfaction or waiver of the conditions set forth
therein;
WHEREAS, as a result of the Distribution (as defined in
the Distribution Agreement), eCOST will cease to be a member of the
PC Mall Consolidated Group; and
WHEREAS, PC Mall and eCOST desire to allocate the Tax (as
defined herein) burdens and benefits of transactions which occurred
on or prior to the Distribution Date (as defined herein) and to
provide for certain other Tax matters, including the assignment of
responsibility for the preparation and filing of Tax Returns (as
defined herein), the payment of Taxes, and the prosecution and
defense of any Tax controversies.
NOW, THEREFORE,
in consideration of the mutual
agreements, provisions and covenants contained in this Agreement,
the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. GENERAL.
Capitalized terms used in this
Agreement and not defined herein shall have the meanings that such
terms have in the Distribution Agreement. As used in this
Agreement, the following terms shall have the following
meanings:
“Accountant” shall have
the meaning set forth in Section 8.2(e) of this
Agreement.
“Active Trade or
Business” shall mean the active conduct (as defined in
Section 355(b)(2) of the Code and the Treasury Regulations
thereunder) by eCOST of the eCOST Business.
“Actually Realized”
shall mean, for purposes of determining the timing of the
realization of a Refund by a Person in respect of any payment,
transaction, occurrence or event, the time at which the amount of
Income Taxes paid by such Person is reduced below the amount of
Income Taxes that such Person would have been required to pay but
for such payment, transaction, occurrence or event.
“Affiliate” shall mean
an entity with respect to which a Party possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such entity, whether through ownership
of voting securities or other interests, by contract or
otherwise.
“After Tax Amount” shall
mean any additional amount necessary to reflect the hypothetical
Tax consequences of the receipt or accrual of any payment required
to be made under this Agreement (including the receipt or payment
of an additional amount or amounts hereunder and the effect of the
deductions available for interest paid or accrued and for Taxes
such as state and local income Taxes), determined by using the
highest marginal corporate Tax rate (or rates, in the case of an
item that affects more than one Tax) for the relevant taxable
period (or portion thereof).
“Audit” shall mean any
audit, assessment of Taxes, other examination by any Governmental
Authority, proceeding, or appeal of such a proceeding relating to
Taxes, whether administrative or judicial, including proceedings
relating to competent authority determinations.
“Board Certificate”
shall have the meaning set forth in Section 5.2(e) of this
Agreement.
“Code” shall mean the
U.S. Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder, including any successor
legislation.
“Combined Return” shall
mean any state, local or foreign Tax Return with respect to Income
Taxes, filed on a consolidated, combined (including nexus
combination, worldwide combination, domestic combination, line of
business combination or any other form of combination) or unitary
basis.
“Consolidated Group”
shall mean a group of entities that files a Consolidated
Return.
“Consolidated Return”
shall mean any Tax Return with respect to U.S. federal Income Taxes
filed on a consolidated basis.
“Contribution” shall
mean the contribution of assets by PC Mall itself directly to eCOST
itself pursuant to Section 2.1 of the Distribution
Agreement.
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“Crossover Options(s)”
shall have the meaning set forth in Section 7.2(b) of this
Agreement.
“Distribution Agreement”
shall have the meaning set forth in the recitals hereto.
“Distribution Date”
shall mean the close of business on the date on which the
Distribution is effected.
“Distribution Taxes”
shall mean any Taxes imposed on PC Mall or any Affiliate of PC Mall
(other than eCOST), resulting from or in connection with the
failure of the Distribution to be tax-free to PC Mall under the
Code (including, without limitation, any Tax resulting from the
failure of the Distribution to qualify under Section 355 or Section
368 of the Code or the application of Section 355(d) or Section
355(e) of the Code to the Distribution) or corresponding provisions
of the laws of any other jurisdictions. Each Tax referred to in the
immediately preceding sentence shall be determined using the
highest marginal corporate rate applicable to such Tax for the
relevant taxable period (or portion thereof).
“eCOST” shall have the
meaning set forth in the recitals hereto.
“eCOST Business” shall
have the meaning set forth in the Distribution
Agreement.
“eCOST Capital Stock”
shall mean all classes or series of capital stock of eCOST,
including (i) the eCOST Common Shares; (ii) all options, warrants
and other rights to acquire such capital stock; and (iii) all
instruments properly treated as stock in eCOST for U.S. federal
Income Tax purposes.
“eCOST Common Shares”
shall have the meaning set forth in the recitals hereto.
“eCOST Indemnitees”
shall mean eCOST, its directors, officers, employees, agents and
stockholders.
“eCOST Option” shall
mean an option to acquire eCOST Capital Stock.
“eCOST Optionee” shall
mean a person who at the time of the exercise of a Replacement
Option (i) is employed by or otherwise providing services to eCOST,
or (ii) is not employed by or otherwise providing services to a
member of either eCOST or the PC Mall Group but who previously was
employed by or otherwise provided services to eCOST and after the
termination of such relationship did not become employed by or
otherwise provide services to a member of the PC Mall
Group.
“eCOST Separate Federal
Amount” shall have the meaning set forth in Section 2.4(b) of
this Agreement.
“eCOST Separate Combined
Amount” shall have the meaning set forth in Section 2.4(c) of
this Agreement.
“eCOST Separate Tax Return
Amount” shall have the meaning set forth in Section 2.4(a) of
this Agreement.
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“Effective Period” shall
include all taxable periods of the PC Mall Consolidated Group that
begin or end on or after the date of the Offering, provided that
eCOST is included in the PC Mall Consolidated Group for a portion
of such taxable period.
“Fifty-Percent or Greater
Interest” shall have the meaning ascribed to such term for
purposes of Sections 355(d) and 355(e) of the Code.
“Filing Party” shall
have the meaning set forth in Section 8.1(a) of this
Agreement.
“Final Determination”
shall mean the final resolution of liability for any Tax for any
taxable period, including any related interest or penalties, by or
as a result of: a final and unappealable decision, judgment, decree
or other order by any court of competent jurisdiction; (ii) a
closing agreement or accepted offer in compromise under Section
7121 or 7122 of the Code, or comparable agreement under the laws of
other jurisdictions, which resolves the entire Tax liability for
any taxable period; (iii) any allowance of a refund or credit in
respect of an overpayment of Tax, but only after the expiration of
all periods during which such refund may be recovered by the
jurisdiction imposing the Tax; or (iv) any other final disposition,
including by reason of the expiration of the applicable statute of
limitations.
“Foreign Taxes” shall
mean any Taxes imposed by a foreign Governmental
Authority.
“Governmental Authority”
shall mean any federal, state, local, foreign or international
court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental
authority.
“Income Tax Return”
shall mean any Tax Return with respect to Income Taxes.
“Income Taxes” shall
mean any Taxes determined by or with reference to income or imposed
in lieu of income Taxes, such as Taxes based on net worth or gross
receipts. “Income Taxes” shall include any minimum or
alternative minimum Tax.
“Indemnifying Party”
shall mean either PC Mall or eCOST, as the case may be, in its
capacity as the party from which indemnification may be sought as
provided in this Agreement.
“Indemnitee” shall mean
a PC Mall Indemnitee or eCOST Indemnitee, as the case may
be.
“IRS” shall mean the
U.S. Internal Revenue Service or any successor thereto, including,
but not limited to, its agents, representatives, and
attorneys.
“Non-Filing Party” shall
mean PC Mall, if eCOST is the Filing Party, and eCOST, if PC Mall
is the Filing Party.
“Offering” shall have
the meaning set forth in the recitals hereto.
“Officer’s
Certificate” shall mean the letters executed by officers of
PC Mall and eCOST provided to Morrison & Foerster LLP, in
connection with the Tax Opinion.
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“Owing Party” shall have
the meaning set forth in Article III of this Agreement.
“Owed Party” shall have
the meaning set forth in Article III of this Agreement.
“Party” or
“Parties” shall have the meanings as defined in the
recitals hereto.
“PC Mall” shall have the
meaning set forth in the recitals hereto.
“PC Mall Combined
Return” shall mean any Combined Return that actually
includes, by election or otherwise, PC Mall or one or more of its
Affiliates together with eCOST or one or more of its
Affiliates.
“PC Mall Consolidated Federal
Return” shall mean any consolidated federal Income Tax Return
or amendment thereof of the PC Mall Consolidated Group for any PC
Mall Consolidated Return Period.
“PC Mall Consolidated
Group” shall mean, (i) with respect to federal Income Tax as
to any taxable period, PC Mall and Affiliates of PC Mall included
in a consolidated federal Income Tax Return with PC Mall as the
common parent, and (ii) with respect to Taxes other than federal
Income Tax, as to any taxable period, PC Mall and Affiliates of PC
Mall included in a Combined Return which includes PC Mall or one or
more Affiliates of PC Mall.
“PC Mall Consolidated Return
Period” shall mean a taxable period that ends prior to or
includes the Distribution Date for which a consolidated, combined
or unitary (as applicable) federal, state, local or foreign Income
Tax Return is filed or required to be filed by the PC Mall
Consolidated Group.
“PC Mall Consolidated Tax
Liability” shall mean, with respect to any PC Mall
Consolidated Return Period, the Income Tax liability of the PC Mall
Consolidated Group with respect to a PC Mall Consolidated Federal
Return or a PC Mall Combined Return.
“PC Mall Group” shall
mean the PC Mall Consolidated Group, excluding eCOST.
“PC Mall Indemnitees”
shall mean each member of the PC Mall Group, each of their
respective directors, officers, employees, agents, and
shareholders.
“PC Mall Option” shall
mean an option to acquire stock of PC Mall.
“PC Mall Optionee” shall
mean a person who at the time of the exercise of a Replacement
Option (i) is employed by or otherwise providing services to a
member of the PC Mall Group, or (ii) is not employed by or
otherwise providing services to a member of either the PC Mall
Group or eCOST but who previously was employed by or otherwise
provided services to a member of the PC Mall Group and after the
termination of such relationship did not become employed by or
otherwise provide services to eCOST.
“Person” shall mean any
natural person, corporation, business trust, joint venture,
association, company, partnership or government, or any agency or
political subdivision thereof.
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“Post-Distribution
Period” shall mean a taxable period beginning on or after the
Distribution Date.
“Proposed Acquisition
Transaction” shall mean a transaction or series of
transactions (or any agreement, understanding or arrangement,
within the meaning of Section 355(e) of the Code and Treasury
Regulation Section 1.355-7T, or any other Treasury Regulations
promulgated thereunder, to enter into a transaction or series of
transactions), whether such transaction is supported by eCOST
management or shareholders, is a hostile acquisition, or otherwise,
as a result of which eCOST would merge or consolidate with any
other Person or any group of related Persons would (directly or
indirectly) acquire, or have the right to acquire, from eCOST
and/or one or more holders of outstanding shares of eCOST Capital
Stock, a number of shares of eCOST Capital Stock that would, when
combined with the number of shares of eCOST Capital Stock sold
pursuant to the Offering and any other changes in ownership of
eCOST Capital Stock pertinent for purposes of Section 355(e) of the
Code, comprise forty percent (40%) or more of (i) the value of all
outstanding shares of stock of eCOST as of the date of such
transaction; or (ii) the total combined voting power of all
outstanding shares of voting stock of eCOST as of the date of such
transaction, or, with respect to either (i) or (ii), in the case of
a series of transactions, the date of the last transaction of such
series. Notwithstanding the foregoing, a Proposed Acquisition
Transaction shall not include: (i) the adoption by eCOST of a
shareholder rights plan; or (ii) issuances of eCOST that satisfy
Safe Harbor VI (relating to acquisitions in connection with a
person’s performance of services) or Safe Harbor VII
(relating to acquisitions by a retirement plan of an employer) of
Treasury Regulation Section 1.355-7T(d). This definition and the
application hereof are intended to monitor compliance with Section
355(e) of the Code and shall be interpreted accordingly. Any
clarification of, or change in, the statute or Treasury Regulations
promulgated under Section 355(e) of the Code shall be incorporated
in this definition and its interpretation.
“Refund” shall mean any
refund of Taxes, including any reduction in Tax liabilities by
means of a credit, offset or otherwise.
“Replacement Option”
means (i) an option to acquire stock of PC Mall or (ii) an option
to acquire stock of eCOST which option was issued pursuant to
Article V of the Employee Matters Agreement or in connection with
the Distribution, or an option that is issued in exchange for an
option described in clause (i) or (ii) of this
definition.
“Restricted Period”
shall mean the period beginning on the Distribution Date and ending
three years after the Distribution Date.
“Section 5.2(e) Acquisition
Transaction” shall mean any transaction or series of
transactions, other than the Offering, that is not a Proposed
Acquisition Transaction but would be a Proposed Acquisition
Transaction if the percentage reflected in the definition of
Proposed Acquisition Transaction were twenty-five percent (25%)
instead of forty percent (40%).
“Sole Responsibility
Item” shall mean any Tax Item for which the Non-Filing Party
has the entire economic liability under this Agreement.
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“Spin-Off” shall mean
the separation of eCOST from the PC Mall Consolidated Group by
means of the Distribution.
“Tax” or
“Taxes” whether used in the form of a noun or
adjective, shall mean taxes on or measured by income, franchise,
gross receipts, sales, use, excise, payroll, personal property,
real property, ad-valorem, value-added, leasing, leasing use or
other taxes, levies, imposts, duties, charges or withholdings of
any nature (including, without limitation, any liability under
Treasury Regulations Section 1.1502-6 or any comparable provision
of foreign, state or local law). Whenever the term
“Tax” or “Taxes” is used (including,
without limitation, regarding any duty to reimburse another Party
for indemnified taxes or refunds or credits of taxes), it shall
include penalties, fines, additions to tax and interest
thereon.
“Tax Control” shall mean
the definition of “control” set forth in Section 368(c)
of the Code (or in any successor statute or provision), as such
definition may be amended from time to time.
“Tax Counsel” shall mean
a U.S. tax counsel or accountant of recognized national
standing.
“Tax Attribute” shall
have the meaning as defined in Section 2.4(b) of this
Agreement.
“Tax-Free Status” shall
mean the qualification of the Contribution and the Distribution,
taken together, (a) as a reorganization described in Sections
355(a) and 368(a)(1)(D) of the Code; (b) as a transaction in which
the stock distributed thereby is “qualified property”
for purposes of Sections 355(d), 355(e) and 361(c) of the Code; and
(c) as a transaction in which PC Mall, eCOST and the shareholders
of PC Mall recognize no income or gain for U.S. federal income tax
purposes pursuant to Sections 355, 361 and 1032 of the Code, other
than, in the case of PC Mall and eCOST, intercompany items or
excess loss accounts taken into account pursuant to the Treasury
Regulations promulgated pursuant to Section 1502 of the
Code.
“Tax Item” shall mean
any item of income, capital gain, net operating loss, capital loss,
deduction, credit or other Tax attribute relevant to the
calculation of a Tax liability.
“Tax Opinion” shall mean
the opinion letter to be issued by Morrison & Foerster LLP,
addressing the U.S. federal Income Tax consequences of the
Contribution and the Distribution under Sections 368(a)(1)(D) and
355 of the Code.
“Tax-Related Losses”
shall mean (i) all federal, state and local Taxes imposed pursuant
to any settlement, Final Determination, judgment or otherwise; (ii)
all accounting, legal and other professional fees, and court costs
incurred in connection with such Taxes; and (iii) all costs,
expenses and damages associated with shareholder litigation or
controversies and any amount paid by PC Mall (or any Affiliate of
PC Mall) or eCOST (or any Affiliate of eCOST) in respect of the
liability of shareholders, whether paid to the shareholders or to
the IRS or any other Governmental Authority, in each case,
resulting from failure of the Contribution and the Distribution to
have Tax-Free Status.
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“Tax Returns” shall mean
all reports or returns (including information returns) required to
be filed or that may be filed for any period with any Governmental
Authority (whether domestic or foreign) in connection with any Tax
or Taxes (whether domestic or foreign), and any amendments
thereto.
SECTION 1.2. REFERENCES;
INTERPRETATION.
References in this Agreement to any
gender include references to all genders, and references to the
singular include references to the plural and vice versa. The words
“include,” “includes” and
“including” when used in this Agreement shall be deemed
to be followed by the phrase “without limitation.”
Unless the context otherwise requires, references in this Agreement
to Articles and Sections shall be deemed references to Articles and
Sections of this Agreement. Unless the context otherwise requires,
the words “hereof,” “hereby” and
“herein” and words of similar meaning when used in this
Agreement refer to this Agreement in its entirety and not to any
particular Article, Section or provision of this
Agreement.
ARTICLE II
PREPARATION AND FILING OF TAX
RETURNS;
ALLOCATION OF TAX
LIABILITIES
SECTION 2.1. PC MALL CONSOLIDATED FEDERAL
RETURNS.
(a) In General . For any PC
Mall Consolidated Return Period, PC Mall shall have sole and
exclusive responsibility for the preparation and filing of all PC
Mall Consolidated Federal Returns with the IRS. To the extent
provided by law, such Tax Returns shall include the income, gains,
losses, deductions and credits of eCOST.
(b) Cooperation . eCOST shall
furnish PC Mall, at least sixty (60) days before the due date
(including extensions) of any such PC Mall Consolidated Federal
Return, with the information relating to eCOST necessary to prepare
and file such Tax Return, prepared in accordance with this
Agreement, in accordance with instructions from PC Mall and in a
manner consistent with prior Tax Returns; eCOST shall also furnish
PC Mall work papers and other such information and documentation as
is reasonably requested by PC Mall with respect to
eCOST.
SECTION 2.2. PC MALL COMBINED
RETURNS.
(a) In General . For any PC
Mall Consolidated Return Period, PC Mall shall have sole and
exclusive responsibility for the preparation and filing of all PC
Mall Combined Returns.
(b) Cooperation . PC Mall
will timely advise eCOST of the inclusion of eCOST in any PC Mall
Combined Returns and the jurisdictions in which such returns will
be filed. eCOST will evidence its agreement to be included in such
return on the appropriate form(s) and will take such other actions
as may be appropriate, in the opinion of PC Mall, to carry out the
purposes and intent of this Section 2.2. eCOST shall furnish PC
Mall, at least sixty (60) days before the due date (including
extensions) of any such PC Mall Combined Return, with the
information relating to eCOST necessary to prepare and file such
Tax Return, prepared in accordance with this Agreement, in
accordance with instructions from PC Mall and in a manner
consistent with
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prior Tax Returns, if any. eCOST shall also
furnish PC Mall work papers and other such information and
documentation as is reasonably requested by PC Mall with respect to
eCOST.
SECTION 2.3. PC MALL TAX
LIABILITY.
(a) PC Mall Consolidated Federal
Return Liability . Except to the extent otherwise provided
herein, for each PC Mall Consolidated Return Period, PC Mall shall
be liable for and indemnify eCOST against all Tax due in respect of
the PC Mall Consolidated Federal Return, subject to reimbursement
from eCOST as contemplated by Sections 2.5 and 2.6 of this
Agreement.
(b) PC Mall Combined Return
Liability . Except to the extent otherwise provided herein, for
each PC Mall Consolidated Return Period, PC Mall shall be liable
for and indemnify eCOST against all Tax due in respect of any PC
Mall Combined Return with respect to such period, subject to
reimbursement from eCOST as contemplated by Sections 2.5 and 2.6 of
this Agreement.
SECTION 2.4. eCOST SEPARATE RETURN TAX
AMOUNT
(a) In General . For any
taxable period ending during the Effective Period of this
Agreement, the term “ eCOST Separate Tax Return Amount
” shall mean the aggregate amount, whether negative or
positive, of (i) the eCOST Separate Federal Amount and (ii) the
eCOST Separate Combined Amount, each as adjusted pursuant to this
Agreement.
(b) Computation of eCOST Separate
Federal Amount . For each PC Mall Consolidated Return Period
that ends during the Effective Period of this Agreement, PC Mall
shall compute the eCOST Separate Federal Amount for the portion of
such periods in which eCOST is a member of the PC Mall Consolidated
Group. “ eCOST Separate Federal Amount ” means,
with respect to each PC Mall Consolidated Return Period, the
federal Income Tax liability that would be payable by eCOST to the
IRS (in which case such amount will be positive), or the federal
Income Tax Refund that would be payable to eCOST (in which case
such amount will be negative) if eCOST had filed a separate federal
Income Tax Return for the entire period that eCOST is included in
the PC Mall Consolidated Return. In the event that eCOST has a net
operating loss, tax credit or other favorable Tax attribute (a
“ Tax Attribute ”) for federal Tax purposes for
a particular PC Mall Consolidated Return Period that would
eliminate the federal Tax liability of eCOST for such taxable
period but would not yield a federal Tax Refund for eCOST on a
separate federal Income Tax Return basis, the eCOST Separate
Federal Amount shall be zero for such taxable period, and such
federal Tax Attribute shall be taken into account, if at all, by
eCOST in a subsequent PC Mall Consolidated Return Period on such
separate return basis, as herein provided. For the sake of clarity,
it is specifically intended that eCOST shall not be entitled to any
recovery for the use by the PC Mall Consolidated Group of an eCOST
federal Tax Attribute by reason of the fact that such federal Tax
Attribute is not available to eCOST in an eCOST federal Tax Return
for any period beginning on or after the Distribution Date. In
computing the eCOST Separate Federal Amount, eCOST shall follow the
Tax elections and other Tax positions adopted or prescribed by PC
Mall.
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(c) Computation of eCOST Separate
State, Local and Foreign Amount . For each PC Mall Consolidated
Return Period that ends on or after the first day of the Effective
Period of this Agreement, eCOST shall compute as to each
jurisdiction in which a PC Mall Combined Return is filed, the eCOST
Separate Combined Amount for the portion of such periods in which
eCOST is a member of the PC Mall Consolidated Group. “
eCOST Separate Combined Amount ” means, with respect
to each PC Mall Consolidated Return Period, as to each such
jurisdiction in which a PC Mall Combined Return is filed, the Tax
liability that would be payable by eCOST (in which case such amount
will be positive), or the Tax Refund that would be payable to eCOST
(in which case such amount will be negative) if eCOST had filed a
separate Tax Return for the entire period that eCOST is included in
the PC Mall Consolidated Return, in such jurisdiction using
eCOST’s separate apportionment factors. In the event that
eCOST would have a Tax Attribute for a particular PC Mall
Consolidated Return Period in such jurisdiction that would
eliminate the Tax liability of eCOST for such taxable period in
such jurisdiction but would not yield a Tax Refund for eCOST on a
separate return basis, the eCOST Separate State, Local and Foreign
Amount shall be zero for such taxable period, and Tax Attribute
shall be taken into account, if at all, by eCOST in a subsequent PC
Mall Consolidated Return Period on such separate return basis, as
herein provided. For the sake of clarity, it is specifically
intended that eCOST shall not be entitled to any recovery for the
use by the PC Mall Consolidated Group of an eCOST Tax Attribute in
such jurisdiction by reason of the fact that such Tax Attribute in
such jurisdiction is not available to eCOST in an eCOST Tax Return
for any period beginning on or after the Distribution Date. In
computing the eCOST Separate Combined Amount, eCOST shall follow
the Tax elections and other Tax positions adopted or prescribed by
PC Mall.
SECTION 2.5. PAYMENT OF eCOST SEPARATE TAX
RETURN AMOUNTS.
(a) Payment from eCOST to PC
Mall . For any PC Mall Consolidated Return Period covered by
this Agreement, if the eCOST Separate Tax Return Amount with
respect to a Tax Return is a positive amount, eCOST shall pay such
amount to PC Mall on or before the due date (without extensions) of
the relevant PC Mall Consolidated Federal Return or PC Mall
Combined Return for the appropriate PC Mall Consolidated Return
Period. Such payment shall be reduced by any relevant estimated Tax
payments made by eCOST for such taxable period pursuant to Section
2.5(c) of this Agreement. PC Mall may direct or allow the above
payment to be made after the prescribed date. If all relevant
information necessary to determine the amount of the payment is not
available by the due date, the payment shall be based on estimates,
and adjustments shall be made when sufficient information is
available or as soon as practicable after the relevant Tax Return
is filed.
(b) Payment from PC Mall to
eCOST . For any PC Mall Consolidated Return Period covered by
this Agreement, if the eCOST Separate Tax Return Amount with
respect to a Tax Return is a negative amount, PC Mall shall pay to
eCOST the amount that would have been allowed as a net Tax Refund
to eCOST within ten days of the date such Tax Return is filed. Such
payment shall be increased by any estimated Tax payments with
respect to such Tax Return made by eCOST for such taxable period
pursuant to Section 2.5(c) of this Agreement. If all relevant
information necessary to determine the amount of the payment is not
available by the due date of such payment, such payment shall be
based on estimates, and adjustments shall be made when sufficient
information is available.
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(c) Federal Estimated Tax
Payments . For any PC Mall Consolidated Return Period covered
by this Agreement for periods prior to the Distribution, in
accordance with Section 6655(c) of the Code, eCOST shall pay to PC
Mall quarterly installments of federal estimated Tax promptly, but
not later than, the date immediately preceding e
