8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): September 1, 2004

PC MALL, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	0-25790	95-4518700
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

2555 West 190^th Street, Suite 201

Torrance, California 90504

(Address of Principal Executive Offices) (Zip Code)

(310) 354-5600

(Registrant’s telephone number, including area code)

_________________________________________________________________________

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On September 1, 2004, eCOST.com, Inc. (“eCOST”), a subsidiary and reporting segment of PC Mall, Inc. (“we” or “us”), completed its initial public offering of common stock. In connection with closing of eCOST’s initial public offering, we entered into the following agreements with eCOST (the “Inter-Company Agreements”):

• Master Separation and Distribution Agreement

• Tax Allocation and Indemnification Agreement

• Employee Benefit Matters Agreement

• Registration Rights Agreement

The following information summarizes the terms of the Inter-Company Agreements, is not necessarily complete and is qualified in its entirety by the full text of such agreements, which are filed as exhibits to this Report.

Master Separation and Distribution Agreement

The Master Separation and Distribution Agreement contains the key provisions relating to the separation of the eCOST business from our businesses, the general terms and conditions and corporate transactions required to effect the initial public offering of eCOST, which we refer to as the “offering,” the planned distribution of eCOST common stock to our stockholders, and the general intent of the parties as to how these matters will be undertaken and completed.

The Contribution. The Master Separation and Distribution Agreement describes generally the assets that we contributed and transferred to eCOST and the liabilities that eCOST assumed from us, which we refer to as the “contribution.” These assets include substantially all of the assets, properties and rights exclusively used or held for use exclusively in the operation of eCOST’s business. The liabilities include substantially all debts, liabilities, commitments and obligations of any nature, whether known, unknown, contingent or otherwise, to the extent arising out of or relating to eCOST’s business prior to, on or after the contribution date. The Master Separation and Distribution Agreement provides that we will cooperate with eCOST to effect any transfers or contributions of assets that are not completed by the contribution date as promptly following that date as is practicable. Until these transfers can be completed, we will act as a custodian and trustee on eCOST’s behalf with respect to those assets. In an effort to place us and eCOST, insofar as reasonably possible, in the same economic position as each of us would have been had the transfers occurred, the agreement provides that, to the extent possible, we will pass on to eCOST the benefits derived by us from those assets as if the transfers had occurred as contemplated, and eCOST, to the extent possible, will perform on our behalf any obligations we have with respect to those assets.

The Offering. The Master Separation and Distribution Agreement obligates the parties to use their reasonable efforts to satisfy the certain conditions prior to the consummation of the offering, including the effectiveness of the registration statement for the offering; compliance with applicable laws and the terms of the underwriting agreement; approval of eCOST’s common stock for listing on the Nasdaq National Market; and our ownership of at least 80% of eCOST’s outstanding capital stock following the offering.

The Distribution. The Master Separation and Distribution Agreement also governs the rights and obligations of us and eCOST regarding the offering and the proposed distribution by us to our stockholders of the shares of eCOST common stock held by us, which we refer to as the “distribution” or the “spin-off.” Although we have announced that we intend to complete the distribution approximately six months after eCOST’s initial public offering, there are various conditions to the completion of the distribution. Consequently, we cannot assure you as to when the distribution will occur, or whether it will occur at all.

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Conditions to and timing of the Distribution. The Master Separation and Distribution Agreement provides that the distribution is subject to several conditions that must be satisfied, or waived by us in our sole discretion, including:

• our receipt of an opinion from our tax counsel that the contribution 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 Sections 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 competent jurisdiction or other legal restraint or prohibition 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 their 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.

Pursuant to the Master Separation and Distribution Agreement, we and eCOST agree to cooperate to accomplish the distribution and, at our direction, to promptly take any and all actions necessary or desirable to effect the distribution.

Mutual Release of Pre-Offering Claims. The agreement provides for a full release and discharge of all liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the offering, between or among eCOST or any of eCOST’s subsidiaries or affiliates, on the one hand, and us or any of our subsidiaries or affiliates other than eCOST, on the other hand, except as expressly set forth in the agreement. The liabilities released or discharged include liabilities arising under any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the offering. This provision will not impair a party from enforcing the Master Separation and Distribution Agreement or any ancillary agreement related thereto.

Neither we nor eCOST release the other for:

• any liability assumed, transferred, assigned or allocated to the other company under any agreement between us and eCOST relating to the separation, including the Master Separation and Distribution Agreement and any ancillary agreement;

• any liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business between us and eCOST prior to the completion of the offering;

• any liability for unpaid amounts for products, services or refunds owing on products or services due on a value-received basis for work done by either company at the request or on behalf of the other company;

• any liability that we or eCOST may have regarding indemnification or contribution under the Master Separation and Distribution Agreement for claims brought against the other company by third persons;

• in our case, the capital contribution due to eCOST in the amount of $2.5 million; or

• generally, any liability where its release would result in the release of anyone other than someone released under the Master Separation and Distribution Agreement.

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Annual Statements and Accounting. eCOST agreed that, for so long as we are required to consolidate eCOST’s results of operations and financial position or account for our investment in eCOST using the equity method of accounting, eCOST will use its best efforts to enable eCOST’s independent auditors to complete their audit of eCOST’s financial statements in a timely manner so as to permit timely filing of our financial statements. eCOST also agreed that it will maintain disclosure controls and procedures and internal controls over financial reporting as required under applicable law. eCOST agreed to provide to us and our independent auditors all information required for us to meet our schedule for the filing and distribution of our financial statements and to make available to us and our independent auditors all documents necessary for the annual audit of eCOST as well as access to the responsible eCOST personnel so that eCOST and its independent auditors may conduct their audits relating to eCOST’s financial statements. eCOST also agreed to adhere to certain of our specified accounting policies and to notify and consult with us regarding any changes to eCOST’s accounting principles and estimates used in the preparation of eCOST’s financial statements, and any deficiencies in, or violations of law in connection with, eCOST’s internal controls over financial reporting.

Indemnification. Under the Master Separation and Distribution Agreement, eCOST is required to indemnify us and our representatives and affiliates from all losses suffered by us or our representatives or affiliates arising out of or related to any of the following:

• eCOST’s failure to pay, perform or discharge in due course any of eCOST’s liabilities;

• eCOST’s business or liabilities related to eCOST’s business;

• eCOST’s failure to comply with the terms of the Master Separation and Distribution Agreement or any of the ancillary agreements related thereto; or

• any untrue statement of a material fact or material omission in the prospectus or any similar documents relating to the offering or the distribution.

We are required to indemnify eCOST and eCOST’s representatives and affiliates from any and all losses suffered by eCOST or eCOST’s representatives or affiliates arising out of or related to any of the following:

• our failure to pay, perform or discharge in due course our liabilities that are not assumed by eCOST in connection with the distribution or eCOST’s separation from us;

• the operation of our business or liabilities relating to our business, other than eCOST’s business; or

• our failure to comply with the terms of the Master Separation and Distribution Agreement or any of the other agreements between us and eCOST entered into in connection with the separation and the distribution.

Any indemnification rights under the foregoing provisions are subject to any limitations of liability contained in any ancillary agreement relating to the separation or the distribution or any ongoing relationship between eCOST and us or our affiliates. Any rights to indemnification for tax liabilities will be governed solely by the Tax Allocation and Indemnification Agreement, and other rights to indemnification contained in the ancillary agreements will be governed by those agreements. All indemnification amounts will be reduced by any insurance proceeds and other offsetting amounts recovered by the party entitled to indemnification, and no party will be liable to any other party for incidental, punitive or any other special damages other than as a reimbursement for damages of this nature paid to an unrelated party.

Access to Information. Under the Master Separation and Distribution Agreement, we and eCOST are each obligated to provide each other access to information as follows:

• subject to applicable confidentiality obligations and other restrictions, we and eCOST will give each other any information within each other’s possession that the requesting party reasonably needs to

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comply with requirements imposed on the requesting party by a governmental authority, for use in any proceeding or to satisfy audit, accounting or similar requirements, or to comply with our respective obligations under the Master Separation and Distribution Agreement or any ancillary agreement;

• for so long as we are required to consolidate eCOST’s results of operations and financial position or account for our investment in eCOST using the equity method of accounting, eCOST will provide to us, at no charge, all financial and other data and information that we determine is necessary or advisable in order to prepare our financial statements and reports or filings with any governmental authority, including copies of all quarterly and annual financial information and other reports and documents eCOST intends to file with the Securities and Exchange Commission prior to such filings (as well as final copies upon filing), and copies of eCOST’s budgets and financial projections;

• eCOST will consult with us regarding the timing and content of eCOST’s earnings releases and cooperate fully (and cause eCOST’s independent auditors to cooperate fully) with us in connection with any of its public filings;

• we and eCOST will use reasonable efforts to make available to each other’s past and present directors, officers, other employees and agents as witnesses in any legal, administrative or other proceedings in which the other party may become involved;

• the company providing information, consultant or witness services under the Master Separation and Distribution Agreement will be entitled to reimbursement from the other for reasonable expenses incurred in providing this assistance;

• eCOST will have access to documents and objects relating to eCOST’s business that are contained within our records; and

• we and eCOST will each agree to hold in strict confidence all information concerning or belonging to the other party.

Termination. The Master Separation and Distribution Agreement may be terminated by the mutual consent of us and eCOST.

Expenses. In general, we and eCOST are each responsible for our own costs (including all associated third-party costs) incurred in connection with the transactions contemplated by the Master Separation and Distribution Agreement. However, eCOST agreed to pay all costs and expenses relating to the offering, including the underwriting discounts and all financial, legal, accounting and other expenses. Each party will bear its own costs (including all associated third-party costs) and expenses relating to the distribution.

Tax Allocation and Indemnification Agreement

The Tax Allocation and Indemnification Agreement governs the respective rights, responsibilities, and obligations of us and eCOST with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns.

In general, under the Tax Allocation and Indemnification Agreement:

• We are responsible for any U.S. federal, state or local income taxes that are determined on a consolidated, combined or unitary basis on a return that includes us (and/or one or more of our subsidiaries), on the one hand, and eCOST (and/or one or more of its subsidiaries), on the other hand. However, in the event that eCOST or one of its subsidiaries are included in such a return for a period (or portion thereof) beginning after the date of the offering, eCOST is responsible for its portion of the income tax liability in respect of the period as if eCOST and its subsidiaries had filed a separate tax return that included only eCOST and its subsidiaries for that period (or portion thereof);

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• We are responsible for any U.S. federal, state or local income taxes due with respect to returns that include only us and/or our subsidiaries (excluding eCOST and its subsidiaries), and eCOST is responsible for any U.S. federal, state or local income taxes due with respect to returns that include only eCOST and/or its subsidiaries;

• We are responsible for any foreign income taxes of us and our subsidiaries (excluding eCOST and its subsidiaries), and eCOST is responsible for any foreign income taxes of eCOST and its subsidiaries; and

• We are responsible for any non-income taxes attributable to our own business for any period. eCOST is responsible for any non-income taxes attributable to its own business for any period.

We are primarily responsible for preparing and filing any tax return with respect to our affiliated group for U.S. federal income tax purposes and with respect to any consolidated, combined or unitary group for U.S. state or local income tax purposes that includes us or any of our subsidiaries. eCOST generally will be responsible for preparing and filing any tax returns that include only eCOST and its subsidiaries for periods beginning after the offering. As a result of eCOST being included our consolidated federal income tax return until completion of the proposed spin-off, losses incurred by eCOST prior to the spin-off will be reduced by any profits of our group for the year in which the spin-off occurs. Any remaining unused operating loss allocable to eCOST under federal tax law will carry forward to eCOST’s separate federal income tax returns, and will be available to offset its operating profits earned as a stand-alone company. Under the Tax Allocation and Indemnification Agreement, eCOST will not be allocated any remaining unused operating loss under state or local law unless required under applicable state or local law.

eCOST generally has exclusive authority to control tax contests with respect to tax returns that include only eCOST and its subsidiaries. We generally have exclusive authority to control tax contests related to any tax returns of our affiliated group for U.S. federal income tax purposes and with respect to any consolidated, combined or unitary group for U.S. state or local income tax purposes that includes us or any of our subsidiaries. Disputes arising between us and eCOST relating to matters covered by the Tax Allocation and Indemnification Agreement are subject to resolution as described in more detail in the agreement.

The Tax Allocation and Indemnification Agreement assigns responsibilities for administrative matters, such as the filing of returns, payment of taxes due, retention of records and conduct of audits, examinations or similar proceedings. In addition, the agreement provides for cooperation and information sharing with respect to tax matters. Finally, the Tax Allocation and Indemnification Agreement provides that all tax refunds for periods in which eCOST is included in our consolidated, combined or unitary group shall be paid to us, including tax refunds attributable to taxes which eCOST initially paid.

Preservation of the Tax-Free Status of the Distribution. We and eCOST intend that our contribution of assets to eCOST and the distribution, taken together, will qualify as a reorganization pursuant to which no gain or loss is recognized by us or our stockholders for federal income tax purposes under Sections 355, 368(a)(1)(D) and related provisions of the Internal Revenue Code. We intend to seek an opinion from our tax counsel to such effect. In either case, eCOST is required to make certain representations regarding eCOST and its business, and we are required to make certain representations regarding us and our business.

eCOST also agreed to certain restrictions for a three year period after the distribution that are intended to preserve the tax-free status of the contribution and the distribution.

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eCOST may take a certain action or certain actions otherwise prohibited by these covenants if, prior to taking any such action, eCOST has obtained (and provided to us) a written opinion of tax counsel reasonably acceptable to us, or a ruling from the Internal Revenue Service, that such action or actions would not jeopardize the tax-free status of the contribution and the distribution. These covenants include restrictions on eCOST’s ability to:

• engage in certain stock issuance transactions that, when combined with the shares issued in the offering, comprise 40% of its stock;

• merge or consolidate with another corporation;

• liquidate or partially liquidate;

• sell or transfer all or substantially all of its assets;

• redeem or repurchase its stock (except in certain limited circumstances); or

• take any other action which could reasonably be expected to cause Section 355(e) to apply to the distribution.

Indemnification for Tax Liability. eCOST agreed to indemnify us and our affiliates against any and all tax-related liabilities incurred by us or our affiliates that relate to the contribution and the distribution to the extent caused by eCOST’s act or failure to act after the distribution, or as a result of its breach of a representation or a covenant relating to an act or an omission by eCOST that occurs after the distribution, in a manner that causes the distribution to fail to qualify under Section 355 of the Internal Revenue Code or from the application of Section 355(e) of the Internal Revenue Code. We and our affiliates agreed to indemnify eCOST against any and all tax-related liabilities incurred by eCOST that relate to the contribution and the distribution to the extent caused by our or our affiliates’ actions or failure to act before or after the distribution, or as a result of our or our affiliates’ breach of a representation or a covenant in a manner that causes the contribution and the distribution, taken together, to fail to qualify as a reorganization under Sections 355, 368(a)(1)(D) and related provisions of the code of the Internal Revenue Code or from the application of Section 355(e) of the Internal Revenue Code. These liabilities include the substantial tax-related liability that would result if the contribution and the distribution failed to qualify as a tax-free reorganization in which all members of our consolidated, unitary or combined group would have joint and several liability. This indemnification applies even if we have permitted eCOST to take an action that would otherwise have been prohibited under the tax-related covenants described above.

In addition, eCOST has agreed not take any action that could reasonably be expected to jeopardize our “tax control” of eCOST prior to the distribution. “Tax control” generally means our possession of 80% of eCOST’s voting stock and 80% of eCOST’s other classes of stock, and tax control must be maintained by us in order for the distribution to qualify a reorganization as described above. Without limiting the foregoing, eCOST has also agreed that on or before the distribution, eCOST will not issue or grant any shares of its common stock or any rights, warrants, options or other securities to purchase or acquire (whether upon conversion, exchange or otherwise) any shares of its common stock, except for grants of stock options to its employees or directors that by their terms cannot be exercised until after the earlier of the distribution or eighteen months following the offering.

Employee Benefit Matters Agreement

The Employee Benefit Matters Agreement allocates to eCOST some of the assets, liabilities and responsibilities relating to its current and former employees. The agreement also provides for eCOST’s employees’ continued participation in some of the benefit plans that we currently sponsor. Under the agreement, eCOST assumed and agreed to pay, perform and fulfill all obligations relating to its employees arising out of their present or future employment with eCOST and their prior employment with us relating to the eCOST business.

Under the agreement, all of eCOST’s employees will continue to participate in our sponsored benefit plans, such as the pension and retirement plan, health benefit program and group insurance plan, on terms comparable to those for our employees, until the earlier of the distribution or such time as eCOST establishes its own benefit plans for its employees. However, we retain the right to terminate eCOST’s participation in the health benefit program and group insurance plan with 90 days’ advance notice.

Once eCOST establishes its own benefits plans, eCOST may modify or terminate each plan in accordance with the terms of that plan and eCOST’s policies. None of eCOST’s benefit plans will provide benefits that overlap

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benefits provided by our corresponding benefit plan, if any. Each of eCOST’s benefit plans will provide that all service, compensation and other benefit determinations that were recognized under our corresponding benefit plan will be taken into account under eCOST’s benefit plans. Generally, following the distribution, we will cease to have any continuing liability or obligation to eCOST’s current employees and their beneficiaries under any of our benefit plans, programs or practices.

Pursuant to the Employee Benefit Matters Agreement, all options to purchase our common stock that are outstanding on the record date for the distribution and that have not been exercised prior to the distribution date will be converted into two stock options: (1) an option to purchase the number of previously unexercised PC Mall stock options as of the record date, and (2) an option to purchase a number of shares of eCOST common stock equal to the number of previously unexercised PC Mall stock options times a fraction, the numerator of which is the total number of shares of eCOST common stock distributed to our stockholders in the distribution and the denominator of which is the total number of shares of PC Mall common stock outstanding on the record date for the distribution. Any outstanding warrants to purchase our common stock will be similarly adjusted under the terms of the Master Separation and Distribution Agreement.

We and eCOST also agreed that, without the other’s consent, for a period of two years following the offering, neither party nor its affiliates will solicit or hire any employee of the other party who was employed by the other party or its affiliates within six months prior to such solicitation or hiring.

Registration Rights Agreement with eCOST

We entered into a Registration Rights Agreement with eCOST which grants us the right, in certain circumstances, to require registration of shares of eCOST common stock that are held by us. The registration rights granted to us under the agreement terminate upon the consummation of the distribution.

Demand Registration. We may request five demand registrations under the Securities Act of all or any portion of eCOST shares covered by the agreement, and eCOST is obligated to register such shares as requested by us. However, we may not make a request for registration until 181 days following the closing of the offering. eCOST is not required to undertake a demand registration within 90 days of the effective date of a registration statement filed by eCOST under the Securities Act covering an underwritten public offering of its securities. In addition, eCOST has the right to postpone the filing or effectiveness of any demand registration for up to 60 days in the aggregate during any 12-month period if eCOST determines in good faith that such registration may interfere with or adversely affect the negotiation or completion of a proposed transaction or would involve initial or continuing disclosure obligations that may not be in the best interest of eCOST’s stockholders. Further, the demand registration rights will not apply if, in the opinion of eCOST’s counsel, such registration would jeopardize the tax-free status of the distribution.

Piggy-Back Registration Rights. If eCOST at any time intends to file on its behalf or on behalf of any of its other security holders a registration statement in connection with a public offering of any of its securities on a form and in a manner that would permit the registration for offer and sale of eCOST common stock held by us, we have the right to include our shares of eCOST common stock in that offering. However, the piggy-back registration rights will not apply if, in the opinion of eCOST’s counsel, such registration would jeopardize the tax-free status of the distribution.

Registration Expenses. We are responsible for all of the costs and expenses associated with any demand registration. eCOST is responsible for all of the costs and expenses for any piggyback registration, excluding costs and expenses for underwriting discounts, selling commissions and transfer taxes applicable to the sale of the securities and any legal fees and expenses of our counsel or our other advisers, which will be our responsibility.

Termination. The rights under the agreement terminate upon the earliest to occur of:

• the distribution;

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• such time as the registrable shares have been sold;

• such time as the registrable shares have been registered under the Securities Act for a period of at least 90 days; or

• such time as eCOST receives an opinion of counsel that the registrable shares may be sold by the holder without registration under the Securities Act and without restriction as to the quantity and manner of such sales.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

Exhibit	Description
10.56	Master Separation and Distribution Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004
10.57	Tax Allocation and Indemnification Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004
10.58	Employee Benefit Matters Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004
10.59	Registration Rights Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		PC MALL, INC.
Date:	September 7, 2004	By:	/s/     TED SANDERS
			Ted Sanders
			Chief Financial Officer

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Index to Exhibits

Exhibit	Description
10.56	Master Separation and Distribution Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004
10.57	Tax Allocation and Indemnification Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004
10.58	Employee Benefit Matters Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004
10.59	Registration Rights Agreement between PC Mall, Inc. and eCOST.com, Inc. dated September 1, 2004.

EX-10.56

EXHIBIT 10.56

MASTER SEPARATION AND DISTRIBUTION AGREEMENT

between

PC MALL, INC.

and

eCOST.COM, INC.

Dated as of September 1, 2004

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	2
ARTICLE II	CONTRIBUTION AND ASSUMPTION	10
2.1.	Contribution of eCOST Assets	10
2.2.	Assumption of Liabilities	10
2.3.	Closing Date; Deliveries	11
2.4.	No Representations or Warranties	11
2.5.	Transfers Not Effected on Closing Date	11
2.6.	Shared Contracts	12
2.7.	Inter-Group Indebtedness	13
ARTICLE III	THE IPO AND ACTIONS PENDING THE IPO	13
3.1.	Transactions Prior to the IPO	13
3.2.	Proceeds of the IPO	14
3.3.	Conditions Precedent to Consummation of the IPO	14
ARTICLE IV	THE DISTRIBUTION	15
4.1.	The Distribution	15
4.2.	Actions Prior to the Distribution	16
4.3.	Conditions to Distribution	16
4.4.	Fractional Shares	17
4.5.	Adjustment of PC Mall Warrants	17
ARTICLE V	ANCILLARY AGREEMENTS	18
5.1.	Ancillary Agreements	18
5.2.	Termination of Existing Agreements	19
ARTICLE VI	MUTUAL RELEASE; INDEMNIFICATION	19
6.1.	Release of Pre-Closing Claims	19
6.2.	Indemnification by eCost	21
6.3.	Indemnification by PC Mall	22
6.4.	Indemnification Obligations Net of Insurance Proceeds and Other Amounts	22
6.5.	Procedures for Indemnification of Third Party Claims	23
6.6.	Additional Matters	24

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TABLE OF CONTENTS

(continued)

		Page
6.7.	Remedies Cumulative	24
6.8.	Exclusions	24
6.9.	Limitations of Liability	25
6.10.	Survival of Indemnities	25
ARTICLE VII	INTERIM OPERATIONS AND CERTAIN OTHER MATTERS	25
7.1.	Insurance Matters	25
7.2.	Certain Business Matters	26
7.3.	Late Payments	27
ARTICLE VIII	FINANCIAL AND OTHER COVENANTS	27
8.1.	Financial and Other Information	27
ARTICLE IX	EXCHANGE OF INFORMATION; CONFIDENTIALITY	34
9.1.	Agreement for Exchange of Information, Archives	34
9.2.	Ownership of Information	35
9.3.	Compensation for Providing Information	35
9.4.	Record Retention	35
9.5.	Limitation of Liability	35
9.6.	Other Agreements Providing for Exchange of Information	35
9.7.	Production of Witnesses, Records, Cooperation	35
9.8.	Confidentiality	36
9.9.	Protective Arrangements	37
ARTICLE X	ARBITRATION; DISPUTE RESOLUTION	37
10.1.	Agreement to Arbitrate	37
10.2.	Escalation	38
10.3.	Arbitration	38
10.4.	Arbitrator	39
10.5.	Hearings	39
10.6.	Discovery and Certain Other Matters	40
10.7.	Certain Additional Matters	41
10.8.	Limited Court Actions	41
10.9.	Continuity of Service and Performance	42

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TABLE OF CONTENTS

(continued)

		Page
10.10.	Law Governing Arbitration Procedures	42
ARTICLE XI	FURTHER ASSURANCES AND ADDITIONAL COVENANTS	42
11.1.	Further Assurances	42
ARTICLE XII	TERMINATION	44
12.1.	Termination by Mutual Consent	44
12.2.	Other Termination	44
12.3.	Effect of Termination	44
ARTICLE XIII	MISCELLANEOUS	44
13.1.	Counterparts, Entire Agreement, Corporate Power	44
13.2.	Governing Law	45
13.3.	Assignability	45
13.4.	Third Party Beneficiaries	45
13.5.	Notices	45
13.6.	Severability	46
13.7.	Force Majeure	46
13.8.	Publicity	47
13.9.	Expenses	47
13.10.	Headings	47
13.11.	Survival of Covenants	47
13.12.	Waivers of Default	47
13.13.	Specific Performance	47
13.14.	Amendments	47
13.15.	Interpretation	48
13.16.	Limitation of Damages	48

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MASTER SEPARATION AND DISTRIBUTION AGREEMENT

THIS MASTER SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”), dated as of September 1, 2004, is by and between PC Mall, Inc., a Delaware corporation (“PC Mall”), and eCOST.com, Inc., a Delaware corporation (“eCOST”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I hereof.

WHEREAS, eCOST intends to offer and sell for its own account in an initial public offering (the “IPO”) a limited number of shares of its common stock, par value $0.001 per share (the “eCOST Common Stock”), and in furtherance thereof, eCOST has filed a registration statement for the eCOST Common Stock to be sold in the IPO with the SEC;

WHEREAS, PC Mall desires to contribute or otherwise transfer, and to cause certain of its Subsidiaries to contribute or otherwise transfer, certain Assets and Liabilities associated with the eCOST Business to eCOST (the “Contribution”);

WHEREAS, PC Mall intends, approximately six (6) months following the closing of the IPO, to distribute to holders of PC Mall common stock, par value $0.001 per share, all of the outstanding shares of eCOST Common Stock then owned directly or indirectly by PC Mall in a transaction intended to qualify as a tax-free spin-off under Section 355 of the Code (the “Distribution”);

WHEREAS, PC Mall and eCOST intend that the contribution of Assets by PC Mall to eCOST pursuant to Section 2.1, the assumption of Liabilities by eCost pursuant to Section 2.2 and the Distribution, taken together, will qualify as a reorganization for U.S. federal income tax purposes pursuant to which no gain or loss will be recognized by PC Mall or its stockholders under Section 355, 361(b)(3), 368(a)(1)(D) and related provisions of the Code, and that this Agreement is intended to be, and is hereby adopted as, a plan of reorganization under Section 368 of the Code;

WHEREAS, PC Mall, through its Subsidiaries, has historically provided various services to eCOST, and in connection with the separation of PC Mall and eCOST, the parties desire to enter into certain relationships which will continue on a transitional basis; and

WHEREAS, it is appropriate and desirable to set forth the principal corporate transactions required to effect the separation, the IPO, the Distribution, and certain other agreements that will govern certain matters relating to the IPO and the Distribution and the relationship of PC Mall and eCOST following the IPO and the Distribution.

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NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the receipt and adequacy of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement the following terms shall have the following meanings:

“Action” means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

“Administrative Services Agreement” means that certain Administrative Services Agreement to be entered into between eCOST and a Subsidiary of PC Mall, effective as of the Closing Date, as such agreement may be amended from time to time.

“Affiliate” of any Person means a Person that controls, is controlled by, or is under common control with such Person. As used herein, “control” means the possession, directly or indirectly, of 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.

“AF Services” means AF Services, Inc., a wholly-owned subsidiary of PC Mall, and any successor thereto.

“AF Services Software License Agreement” means that certain Software License Agreement to be entered into between eCOST and AF Services, effective as of the Closing Date, as such agreement may be amended from time to time.

“Agent” means the distribution agent to be appointed by PC Mall to distribute to the stockholders of PC Mall pursuant to the Distribution the shares of eCOST Common Stock held by PC Mall.

“Agreement” means this Separation and Distribution Agreement, including all of the Schedules hereto.

“Ancillary Agreements” means the Contribution Agreement; Tax Allocation and Indemnification Agreement; Employee Matters Agreement; Administrative Services Agreement; Product Sales, Inventory Management and Order Fulfillment Agreement; Information Technology Systems Usage and Services Agreement; License Agreements; Registration Rights Agreements; and Sublease Agreement; each in the form set forth in Schedule A hereto, including any exhibits, schedules, attachments, tables or other appendices thereto, and each agreement and other instrument contemplated therein or herein.

“Annual Financial Statements” has the meaning set forth in Section 8.1(a)(v) of this Agreement.

“Applicable Deadline” has the meaning set forth in Section 10.3(b) of this Agreement.

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“Arbitration Act” means the United States Arbitration Act, 9 U.S.C. §§ 1-14, as the same may be amended from time to time.

“Arbitration Demand Date” has the meaning set forth in Section 10.3(a) of this Agreement.

“Arbitration Demand Notice” has the meaning set forth in Section 10.3(a) of this Agreement.

“Assets” means assets, properties and rights (including goodwill and rights arising under Contracts), wherever located (including in the possession of vendors, other Persons or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person.

“Bad Act” has the meaning set forth in Section 2.2 of this Agreement.

“Closing” means the receipt by eCOST of the net proceeds of the IPO in accordance with the terms of the Underwriting Agreement.

“Closing Date” means the first time at which any shares of eCOST Common Stock are sold to the Underwriters pursuant to the IPO in accordance with the terms of the Underwriting Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Consents” means any consent, waiver or approval from, or notification requirements to, any third party.

“Contracts” means any contract, agreement, lease, license, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of its property under applicable law.

“Contribution” has the meaning set forth in the Recitals to this Agreement.

“Contribution Agreements” means the agreements entered into by and between PC Mall and certain of its Subsidiaries, on the one hand, and eCOST on the other hand, pursuant to which the Contribution will be effected.

“CPR” means the Center for Public Resources.

“Distribution” means the distribution by PC Mall on a pro rata basis to holders of PC Mall Common Stock of all of the outstanding shares of eCOST Common Stock owned directly or indirectly by PC Mall on the Distribution Date as set forth in Article V.

“Distribution Date” means the date determined pursuant to Section 4.1 of this Agreement on which the Distribution occurs.

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“eCOST” has the meaning set forth in the Preamble to this Agreement.

“eCOST Adjusted Exercise Price to Market Ratio” has the meaning set forth in Schedule 4.5(5).

“eCOST Assets” means all right, title and interest of the PC Mall Group (including, for purposes of this definition, any member of the eCOST Group) in and to:

(a) any Assets reflected on the audited balance sheet of eCOST contained in the Registration Statement or the accounting records supporting such balance sheet, and any Assets acquired by or for eCOST, the eCOST Business or any member of the eCOST Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(b) any and all Assets of the PC Mall Group (including, for purposes of this definition, any member of the eCOST Group) that are used exclusively or held for use exclusively in the eCOST Business; and

(c) any and all Assets that are expressly listed, scheduled or otherwise clearly described in a Contribution Agreement or any other Ancillary Agreement as Assets to be transferred to eCOST or any other member of the eCOST Group.

“eCOST Business” means the business of eCOST as currently or historically conducted or as proposed to be conducted.

“eCOST Common Stock” means Common Stock, $0.001 par value per share, of eCOST.

“eCOST Group” means eCOST, each Subsidiary of eCOST and each other Person that is either controlled directly or indirectly by eCOST immediately after the Closing Date or that is contemplated to be controlled by eCOST.

“eCOST Indemnitees” has the meaning set forth in Section 6.3 of this Agreement.

“eCOST Liabilities” means the following:

(a) any and all Liabilities to the extent arising out of or relating to the eCOST Business or the eCOST Assets, in each case whether such Liabilities arise or accrue prior to, on or after the Closing Date (other than any Tax-related Liabilities that are specifically retained by PC Mall under the Tax Allocation and Indemnification Agreement and any employee-related Liabilities that are specifically retained by PC Mall under the Employee Matters Agreement);

(b) any and all Liabilities to the extent arising out of or relating to the operation of any business conducted by any member of the eCOST Group at any time after the Closing Date;

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(c) any and all Liabilities that are expressly listed, scheduled or otherwise clearly described in a Contribution Agreement or any other Ancillary Agreement as Liabilities to be assumed by eCOST or any member of the eCOST Group; and

(d) all obligations of the eCOST Group under or pursuant to this Agreement, any Ancillary Agreement or any other instrument entered into in connection herewith or therewith.

“eCOST Public Documents” has the meaning set forth in Section 8.1(a)(viii) of this Agreement.

“eCOST Shared Contract” means any Contract included in the eCOST Assets relating in part to the PC Mall Business.

“eCost Warrant” has the meaning set forth in Section 4.5(a) of this Agreement.

“eCOST’s Auditors” has the meaning set forth in Section 8.1(b)(i) of this Agreement.

“Effective Time” means 5:00 p.m., Eastern Standard Time or Eastern Daylight Time (whichever shall be then in effect), on the Distribution Date.

“Employee Matters Agreement” means that certain Employee Matters Agreement entered into between PC Mall and eCOST effective as of the Effective Time, as such agreement may be amended from time to time.

“Environmental Law” means any federal, state, local, foreign or international statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, common law (including tort and environmental nuisance law), legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Authority, now or hereafter in effect relating to health, safety, pollution or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or to emissions, discharges, releases or threatened releases of any substance currently or at any time hereafter listed, defined, designated or classified as hazardous, toxic waste, radioactive or dangerous, or otherwise regulated, under any of the foregoing, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of any such substances, including the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act and the Resource Conservation and Recovery Act, and comparable provisions in state, local, foreign or international law.

“Environmental Liabilities” means all Liabilities relating to, arising out of or resulting from any Environmental Law or contract or agreement relating to environmental, health or safety matters (including all removal, remediation or cleanup costs, investigatory costs, governmental response costs, natural resources damages, property damages, personal injury damages, costs of compliance with any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations) and all costs and expenses, interest, fines, penalties or other monetary sanctions in connection therewith.

“Escalation Notice” has the meaning set forth in Section 10.2(a) of this Agreement.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“Existing Agreements” means (i) the Administrative Services Agreement dated January 1, 2003 between eCOST and AF Services, Inc.; (ii) the Cash Management Agreement dated January 1, 2003 between eCOST and AF Services, Inc.; (iii) the Merchandising Services Agreement dated January 1, 2003 between eCOST and Mall Marketing, Inc.; and (iv) the Product Sales, Inventory Management and Order Fulfillment Agreement dated January 1, 2003 between eCOST and AF Services, Inc.

“Financial Statements” means the Annual Financial Statements and the Quarterly Financial Statements, collectively.

“GAAP” means U.S. generally accepted accounting principles, consistently applied.

“Governmental Approval” means any notice, report or other filing to be made, or any consent, registration, approval, permit or authorization to be obtained from, any 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.

“Group” means the eCost Group or the PC Mall Group, as applicable.

“Indemnifying Party” has the meaning set forth in Section 6.4(a) of this Agreement.

“Indemnitee” has the meaning set forth in Section 6.4(a) of this Agreement.

“Indemnity Payment” has the meaning set forth in Section 6.4(a) of this Agreement.

“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

“Information Technology Services Agreement” means that certain Information Technology Systems Usage and Services Agreement to be entered into between eCOST and a Subsidiary of PC Mall, effective as of the Closing Date, as such agreement may be amended from time to time.

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“Insurance Policies” means the insurance policies written by insurance carriers unaffiliated with PC Mall pursuant to which eCOST (or their respective officers or directors) will be insured parties after the Closing Date.

“Insurance Proceeds” means those monies: (a) received by an insured from an insurance carrier, or (b) paid by an insurance carrier on behalf of the insured, in any such case net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof.

“Intended Transferee” has the meaning set forth in Section 2.5(b) of this Agreement.

“Intended Transferor” has the meaning set forth in Section 2.5(b) of this Agreement.

“IPO” means the initial public offering by eCOST of shares of eCOST Common Stock pursuant to the IPO Registration Statement.

“IPO Effective Date” means the date on which the IPO Registration Statement is declared effective by the SEC.

“IPO Registration Statement” means the registration statement on Form S-1 (No. 333-115199) filed under the Securities Act, pursuant to which the eCOST Common Stock to be issued in the IPO will be registered, together with all amendments thereto.

“Letter Ruling” has the meaning set forth in Section 4.3(b) of this Agreement.

“Liabilities” means any and all losses, claims, charges, debts, demands, actions, causes of action, suits, damages, obligations, payments, costs and expenses, sums of money, accounts, reckonings, bonds, specialties, indemnities and similar obligations, exonerations, covenants, contracts, controversies, agreements, promises, doings, omissions, variances, guarantees, make whole agreements and similar obligations, and other liabilities, including all contractual obligations, whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and including those arising under any law, rule, regulation, Action, threatened or contemplated Action (including the costs and expenses of demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all costs and expenses, whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened or contemplated Actions), order or consent decree of any Governmental Authority or any award of any arbitrator or mediator of any kind, and those arising under any contract, commitment or undertaking, including those arising under this Agreement or any Ancillary Agreement, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person.

“License Agreements” means the AF Services Software License Agreement and the PC Mall Software License Agreement.

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“PC Mall” has the meaning set forth in the Preamble to this Agreement.

“PC Mall Adjusted Exercise Price to Market Ratio” has the meaning set forth in Schedule 4.5(3) of this Agreement.

“PC Mall Adjusted Warrant” has the meaning set forth in Section 4.5(a) of this Agreement.

“PC Mall Annual Statements” has the meaning set forth in Section 8.1(b)(i) of this Agreement.

“PC Mall Business” means the businesses or operations of the PC Mall Group other than the eCOST Business.

“PC Mall Common Stock” means the Common Stock, $0.001 par value per share, of PC Mall.

“PC Mall Group” means PC Mall and each Person (other than any member of the eCOST Group) that is an Affiliate of PC Mall immediately after the Closing Date.

“PC Mall Indemnitees” has the meaning set forth in Section 6.2 of this Agreement.

“PC Mall Liabilities” means the Liabilities of PC Mall other than the eCOST Liabilities.

“PC Mall Public Filings” has the meaning set forth in Section 8.1(a)(xii) of this Agreement.

“PC Mall Records” shall have the meaning set forth in Section 9.1(b) of this Agreement.

“PC Mall Shared Contract” means any Contract relating in part to the eCOST Business not included in the eCOST Assets.

“PC Mall Software License Agreement” means that certain Software License Agreement entered into between eCOST and PC Mall, effective as of February 25, 1999, as such agreement may be amended from time to time.

“PC Mall Warrant” has the meaning set forth in Section 4.5(a) of this Agreement.

“PC Mall’s Auditors” has the meaning set forth in Section 8.1(b)(i) of this Agreement.

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

“Pre-Distribution Exercise Price to Market Price Ratio” has the meaning set forth in Schedule 4.5(1.) of this Agreement.

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“Prime Rate” means the rate which Chase Manhattan Bank (or any successor thereto or other major money center commercial bank agreed to by the parties hereto) announces from time to time as its prime lending rate, as in effect from time to time.

“Product Sales, Inventory Management and Order Fulfillment Agreement” means that certain Product Sales, Inventory Management and Order Fulfillment Agreement to be entered into between eCOST and a Subsidiary of PC Mall, effective as of the Closing Date, as such agreement may be amended from time to time.

“Prospectus” means each preliminary, final or supplemental prospectus forming a part of the IPO Registration Statement.

“Quarterly Financial Statements” has the meaning set forth in Section 8.1(a)(iv) of this Agreement.

“Record Date” means the close of business on the date to be determined by the PC Mall Board of Directors as the record date for determining stockholders of PC Mall entitled to receive shares of eCOST Common Stock in the Distribution.

“Registration Rights Agreements” means the Registration Rights Agreements to be entered into between eCOST and each of PC Mall and Frank F. Khulusi, effective as of the Closing Date, as such agreements may be amended from time to time.

“Representatives” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants or attorneys.

“SEC” means the U.S. Securities and Exchange Commission or any successor agency.

“Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“Security Interest” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

“Sublease Agreement” means that certain Amended and Restated Sublease Agreement entered into between PC Mall and eCOST, effective as of the date hereof, as such agreement may be amended from time to time.

“Subsidiary” of any person means any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or indirectly wholly owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person.

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“Tax” or “Taxes” has the meaning set forth in the Tax Indemnification and Allocation Agreement.

“Tax Control” means the definition “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-Free Status” has the meaning set forth in the Tax Indemnification and Allocation Agreement.

“Tax Indemnification and Allocation Agreement” means the Tax Indemnification and Allocation Agreement, dated as of the date hereof, by and among PC Mall and eCOST.

“Tax Opinion” has the meaning set forth in the Tax Indemnification and Allocation Agreement.

“Third Party Claim” has the meaning set forth in Section 6.5(a) of this Agreement.

“Underwriters” means the managing underwriters for the IPO.

“Underwriting Agreement” means the underwriting agreement to be entered into among eCOST and the Underwriters with respect to the IPO.

“Unforeseen Damages” has the meaning set forth in Section 6.9(b) of this Agreement.

ARTICLE II

CONTRIBUTION AND ASSUMPTION

2.1. Contribution of eCOST Assets. Unless otherwise provided in this Agreement or in any Ancillary Agreement, on the Closing Date, PC Mall will (and PC Mall will cause its applicable Subsidiaries to) assign, transfer and convey to eCOST and its applicable Subsidiaries, and eCOST will (and eCOST will cause its applicable Subsidiaries to) receive and accept from PC Mall and its applicable Subsidiaries, all of PC Mall’s and its applicable Subsidiaries’ right, title and interest in and to any eCOST Assets. Such assignments, transfers and conveyances will be effective at such times as provided in each respective Ancillary Agreement and will be subject to the terms and conditions of this Agreement and any applicable Ancillary Agreement.

2.2. Assumption of Liabilities. Unless otherwise provided in this Agreement or in any Ancillary Agreement, on the Closing Date, eCOST will assume, and on a timely basis pay, perform, satisfy and discharge all eCOST Liabilities in accordance with their respective terms. eCOST will be responsible for all eCOST Liabilities, regardless of (a) when or where such Liabilities arose or arise, (b) whether the facts on which such Liabilities are based occurred on, prior to or subsequent to the Closing Date, (c) where or against whom such Liabilities are asserted or determined, (d) whether asserted or determined on, prior to or subsequent to the Closing Date, or (e) whether arising from or alleged to arise from negligence, recklessness, violation of law, fraud or misrepresentation (each, a “Bad Act”) by any member of the PC Mall Group, the eCOST Group or any of their respective past or

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present Representatives; provided, however, that this clause 2.2(e) will not limit eCOST’s right to make a claim against a PC Mall Group member for Liabilities suffered by it to the extent that such Liabilities are a direct result of a Bad Act committed by a PC Mall Group member subsequent to the Closing Date; provided further, however, that eCOST’s right to make such a claim may otherwise be limited in any Ancillary Agreement. Such assumptions of eCOST Liabilities will be effective at such times as provided in each respective Ancillary Agreement and will be subject to the terms and conditions of this Agreement and any applicable Ancillary Agreement.

2.3. Closing Date; Deliveries. In furtherance of the assignment, transfer and conveyance of the eCOST Assets and the assumption of the eCOST Liabilities as set forth in this Agreement and the Ancillary Agreements, unless otherwise provided in this Agreement or in any Ancillary Agreement, on the Closing Date, the parties will execute and deliver, and they will cause their respective Subsidiaries and Representatives, as applicable, to execute and deliver: (a) each of the Contribution Agreements and other Ancillary Agreements; (b) such bills of sale, stock powers, certificates of title, assignments of Contracts, subleases and other instruments of transfer, conveyance and assignment as, and to the extent, necessary or convenient to evidence the transfer, conveyance and assignment to eCOST of all of PC Mall’s (or, as applicable, its Subsidiaries’) right, title and interest in and to the eCOST Assets; and (c) such assumptions of Contracts and other instruments of assumption as, and to the extent, necessary or convenient to evidence the valid and effective assumption of the eCOST Liabilities by eCOST.

2.4. No Representations or Warranties. eCOST acknowledges and agrees that, except as expressly set forth in this Agreement or any Ancillary Agreement, (a) no member of the PC Mall Group is making any representations or warranties in this Agreement or any Ancillary Agreement, express or implied, as to the condition, quality, merchantability or fitness of any eCOST Asset transferred pursuant to this Agreement, any Ancillary Agreement or any other agreement contemplated hereby or thereby, (b) all such eCOST Assets will be transferred on an “as is,” “where is” basis, and (c) eCOST will bear the economic and legal risks that any conveyance will prove to be insufficient to vest in it good and marketable title, free and clear of any security interest, pledge, lien, charge, claim or other encumbrance of any nature whatsoever.

2.5. Transfers Not Effected on Closing Date.

(a) The parties acknowledge and agree that some of the transfers contemplated by this Article II may not be effected on the Closing Date due to the inability of the parties to obtain necessary consents or approvals or the inability of the parties to take certain other actions necessary to effect such transfers on the Closing Date. To the extent any transfers contemplated by this Article II have not been fully effected on the Closing Date, each of PC Mall and eCOST will cooperate and use commercially reasonable efforts (and will cause the applicable members of its respective Group to use such efforts) to obtain any necessary consents or approvals or take any other actions necessary to effect such transfers as promptly as practicable following the Closing Date.

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(b) Nothing in this Agreement will be deemed to require the transfer or assignment of any Contract or other Asset by PC Mall or one of its Subsidiaries (an “Intended Transferor”) to eCOST or one of its Subsidiaries (an “Intended Transferee”) to the extent that such transfer or assignment would constitute a material breach of such Contract or cause forfeiture or loss of such Asset; provided, however, that even if such Contract or other Asset cannot be so transferred or assigned, such Contract or other Asset will be deemed an eCOST Asset solely for purposes of determining whether any Liability is an eCOST Liability.

(c) If an attempted assignment would be ineffective or would impair an Intended Transferee’s rights under any such eCOST Asset so that the Intended Transferee would not receive all such rights, then the parties will use commercially reasonable efforts to provide to, or cause to be provided to, the Intended Transferee, to the extent permitted by law, the rights of any such eCOST Asset and take such other actions as may reasonably be requested by the other party in order to place the Intended Transferee, insofar as reasonably possible, in the same position as if such eCOST Asset had been transferred as contemplated hereby. In connection therewith, (i) the Intended Transferor will promptly pass along to the Intended Transferee when received all benefits derived by the Intended Transferor with respect to any such eCOST Asset, and (ii) the Intended Transferee will pay, perform and discharge on behalf of the Intended Transferor all of the Intended Transferor’s obligations with respect to any such eCOST Asset in a timely manner and in accordance with the terms thereof which it may do without breach. If and when such consents or approvals are obtained or such other required actions have been taken, the transfer of the applicable eCOST Asset will be effected in accordance with the terms of this Agreement and any applicable Ancillary Agreement.

2.6. Shared Contracts. The parties agree as follows:

(a) At the written request of eCOST, PC Mall will, and will cause other members of the PC Mall Group to, to the extent permitted by the applicable PC Mall Shared Contract and applicable law, make available to eCOST or applicable members of the eCOST Group the benefits and rights under the PC Mall Shared Contracts (except where the benefits or rights under such PC Mall Shared Contracts are specifically provided pursuant to an Ancillary Agreement) which are substantially equivalent to the benefits and rights enjoyed by the PC Mall Group under each PC Mall Shared Contract for which such request is made by eCOST, to the extent such benefits relate to the eCOST Business; provided, however, that the applicable members of the eCOST Group will assume and discharge (or promptly reimburse PC Mall for) the obligations and liabilities under the relevant PC Mall Shared Contracts associated with the benefits and rights so made available to them.

(b) At the written request of PC Mall, eCOST will, and will cause other members of the eCOST Group to, to the extent permitted by the applicable eCOST Shared Contract and applicable law, make available to PC Mall or applicable members of the PC Mall Group the benefits and rights under the eCOST Shared Contracts (except where the benefits or rights under such eCOST Shared Contracts are specifically provided pursuant to an Ancillary Agreement) which are substantially equivalent to the benefits and rights enjoyed by the eCOST Group under each eCOST Shared Contract for which such request is made by PC Mall, to the extent such benefits relate to the PC Mall Business; provided, however, that the applicable members of the PC Mall Group will assume and discharge (or promptly reimburse eCOST for)

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the obligations and liabilities under the relevant eCOST Shared Contracts associated with the benefits and rights so made available to them.

The parties’ rights and obligations pursuant to this Section 2.6 will terminate upon the earliest to occur of (i) the Distribution Date, (ii) the termination of PC Mall’s obligation to effect the Distribution pursuant to Article XII, and (iii) with respect to any PC Mall Shared Contract or eCOST Shared Contract in particular, such time that the arrangement pursuant to this Section 2.6 is no longer permitted thereunder.

2.7. Inter-Group Indebtedness. On or prior to the Closing Date, each party will repay, and each party will cause each of its Subsidiaries to repay, as applicable, its respective Inter-Group Indebtedness in accordance with the terms of such Inter-Group Indebtedness.

ARTICLE III

THE IPO AND ACTIONS PENDING THE IPO

3.1. Transactions Prior to the IPO. Subject to the conditions specified in Section 3.3, PC Mall and eCOST shall use their commercially reasonable efforts to consummate the IPO. Such actions shall include, but not necessarily be limited to, those specified in this Section 3.1. eCOST shall file such amendments or supplements to the IPO Registration Statement as may be necessary in order to cause the same to become and remain effective as required by law or by the Underwriters, including, but not limited to, filing such amendments to the IPO Registration Statement as may be required by the Underwriting Agreement, the SEC or federal, state or foreign securities laws. PC Mall and eCOST shall also cooperate in preparing, filing with the SEC and causing to become effective a registration statement registering the eCOST Common Stock under the Exchange Act, and any registration statements or amendments thereto which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the IPO, the Distribution or the other transactions contemplated by this Agreement or the Ancillary Agreements.

(a) eCOST shall enter into the Underwriting Agreement, in form and substance reasonably satisfactory to eCOST and PC Mall and shall comply with its obligations thereunder.

(b) PC Mall and eCOST shall consult with each other and the Underwriters regarding the timing, pricing and other material matters with respect to the IPO.

(c) eCOST shall use commercially reasonable efforts to take all such action as may be necessary or appropriate under state securities and blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) in connection with the IPO.

(d) eCOST shall prepare, file and use commercially reasonable efforts to seek to make effective, an application for listing of the eCOST Common Stock issued in the IPO on the Nasdaq National Market, subject to official notice of issuance.

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(e) eCOST shall participate in the preparation of materials and presentations as the Underwriters shall deem necessary or desirable.

(f) eCOST shall pay all third party costs, fees and expenses relating to the IPO, all of the reimbursable expenses of the Underwriters pursuant to the Underwriting Agreement, all of the costs of producing, printing, mailing and otherwise distributing the Prospectus, as well as the Underwriters’ discount as provided in the Underwriting Agreement.

3.2. Proceeds of the IPO. The IPO will be a primary offering of eCOST Common Stock, and eCOST shall use the net proceeds of the IPO in the manner described in the Registration Statement.

3.3. Conditions Precedent to Consummation of the IPO. As soon as practicable after the date of this Agreement, the parties hereto shall use commercially reasonable efforts to satisfy the following conditions to the consummation of the IPO. The obligations of the parties to consummate the IPO shall be conditioned on the satisfaction, or waiver by PC Mall, of the following conditions:

(a) The IPO Registration Statement shall have been declared effective by the SEC, and there shall be no stop order in effect with respect thereto.

(b) The actions and filings with regard to state securities and blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) described in Section 3.1 shall have been taken and, where applicable, have become effective or been accepted.

(c) The eCOST Common Stock to be issued in the IPO shall have been approved for listing on the Nasdaq National Market, subject only to official notice of issuance.

(d) eCOST shall have entered into the Underwriting Agreement and all conditions to the obligations of eCOST and the Underwriters shall have been satisfied or waived.

(e) PC Mall shall be satisfied in its sole discretion that it will possess Tax Control of eCOST immediately following the IPO, and all other matters regarding the Tax-Free Status will, to the extent applicable as of the time of the IPO, be satisfied or can reasonably be anticipated to be satisfied, and there shall be no event or condition that is likely to cause any of such conditions not to be satisfied as of the time of the Distribution or thereafter.

(f) No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the IPO or any of the other transactions contemplated by this Agreement or any Ancillary Agreement shall be in effect.

(g) Such other actions shall have been taken as the parties hereto may, based upon the advice of counsel, reasonably request to be taken prior to the IPO in order to assure the successful completion of the IPO and the other transactions contemplated by this Agreement.

(h) This Agreement shall not have been terminated.

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ARTICLE IV

THE DISTRIBUTION

4.1. The Distribution.

(a) PC Mall intends, following the consummation of the IPO, to complete the Distribution no sooner than one hundred eighty (180) days following the completion of the IPO (the “Distribution Date”). PC Mall will, in its sole and absolute discretion, determine the date of the consummation of the Distribution and all terms of the Distribution, including without limitation, the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution. In addition, PC Mall may, at any time and from time to time until the completion of the Distribution, modify or change the terms of the Distribution, including, without limitation, by accelerating or delaying the timing of the consummation of all or part of the Distribution. eCOST will cooperate with PC Mall in all respects to accomplish the Distribution and will, at PC Mall’s direction, promptly take any and all actions necessary or desirable to effect the Distribution, including, without limitation, to the extent necessary, the registration under the Securities Act and the Exchange Act of the eCOST Common Stock on an appropriate registration form or forms to be designated by PC Mall. PC Mall will select any investment banker(s) and manager(s) in connection with the Distribution, as well as any financial printer, solicitation and/or exchange agent and financial, legal, accounting and other advisors for PC Mall, provided, however, that nothing in this Agreement will prohibit eCOST from engaging (at its own expense) its own financial, legal, accounting and other advisors in connection with the Distribution.

(b) Subject to Section 4.3 hereof, on or prior to the Distribution Date, PC Mall will deliver to the Agent for the benefit of holders of record of PC Mall Common Stock on the Record Date, a single stock certificate, endorsed by PC Mall in blank, representing all of the outstanding shares of eCOST Common Stock then owned directly or indirectly by PC Mall, and shall cause the transfer agent for the shares of PC Mall Common Stock to instruct the Agent to distribute on the Distribution Date the appropriate number of such shares of eCOST Common Stock to each such holder or designated transferee or transferees of such holder.

(c) Subject to Section 4.4, each holder of PC Mall Common Stock on the Record Date (or such holder’s designated transferee or transferees) will be entitled to receive in the Distribution a number of shares of eCOST Common Stock equal to the number of shares of PC Mall Common Stock held by such holder on the Record Date multiplied by a fraction, the numerator of which is the number of shares of eCOST Common Stock beneficially owned by PC Mall on the Record Date and the denominator of which is the number of shares of PC Mall Common Stock outstanding on the Record Date.

(d) eCOST and PC Mall, as the case may be, will provide to the Agent all share certificates and any information required in order to complete the Distribution on the basis specified above.

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(e) Following the Effective Time, and until such eCOST Common Stock is duly transferred in accordance with applicable law, eCOST will regard the Persons entitled to receive such eCOST Common Stock as record holders of eCOST Common Stock in accordance with the terms of the Distribution without requiring any action on the part of such Persons. eCOST agrees that, subject to any transfers of such stock, (i) each such holder will be entitled to receive all dividends payable on, and exercise voting rights and all other rights and privileges with respect to, the shares of eCOST Common Stock then held by such holder, and (ii) each such holder will be entitled, without any action on the part of such holder, to receive one or more certificates representing, or other evidence of ownership of, the shares of eCOST Common Stock then held by such holder.

4.2. Actions Prior to the Distribution.

(a) PC Mall and eCOST shall prepare and mail, prior to the Distribution Date, to the holders of PC Mall Common Stock, such information concerning eCOST, its business, operations and management, the Distribution and such other matters as PC Mall shall reasonably determine and as may be required by law. PC Mall and eCOST will prepare, and eCOST will, to the extent required under applicable law, file with the SEC any such documentation and any requisite no action letters which PC Mall determines are necessary or desirable to effectuate the Distribution and PC Mall and eCOST shall each use commercially reasonable efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable.

(b) PC Mall and eCOST shall take all such action as may be necessary or appropriate under the securities or blue sky laws of the United States (and any comparable laws under any foreign jurisdiction) in connection with the Distribution.

(c) PC Mall and eCOST shall take all reasonable steps necessary and appropriate to cause the conditions set forth in Section 4.3 (subject to Sections 4.3(d)) to be satisfied and to effect the Distribution on the Distribution Date.

(d) eCOST shall prepare and file, and shall use commercially reasonable efforts to have approved, an application for the listing on the Nasdaq National Market, subject to official notice of issuance, (i) the eCOST Common Stock to be distributed in the Distribution, (ii) the shares of eCOST Common Stock covered by eCOST Options to be issued pursuant to the terms of the Employee Matters Agreement, and (iii) the shares of eCOST Common Stock covered by the warrants to be issued pursuant to Section 4.5 hereof.

4.3. Conditions to Distribution. The consummation of the Distribution will be subject to Section 12.2 and the satisfaction, or waiver by PC Mall in its sole and absolute discretion, of the conditions set forth in this Section 4.3. Any determination by PC Mall regarding the satisfaction or waiver of any of such conditions will be conclusive. For the avoidance of doubt, in the event that PC Mall determines not to consummate the Distribution because one or more of such conditions is not satisfied or for any other reason, such determination by PC Mall will not impact the effectiveness of the IPO.

(a) A Tax Opinion from Morrison & Foerster LLP shall have been obtained in form and substance satisfactory to PC Mall in its sole discretion, and shall be confirmed at the

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Distribution Date, to the effect that, among other things, the Contribution and the Distribution taken together will qualify as a reorganization for U.S. federal income tax purposes pursuant to which no gain or loss will be recognized by PC Mall or PC Mall’s stockholders under Sections 355, 361(b)(3), 368(a)(1)(D) and related provisions of the Code.

(b) If PC Mall, in its sole discretion, decides to seek a private letter ruling from the Internal Revenue Service to the same effect as the Tax Opinion (the “Letter Ruling”), the Letter Ruling shall have been obtained in form and substance satisfactory to PC Mall, and shall continue in effect, consistent with the conclusions set forth in Section 4.3(a).

(c) Any material Governmental Approvals and Consents necessary to consummate the Distribution shall have been obtained and be in full force and effect.

(d) No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Distribution shall be in effect and no other event outside the control of PC Mall shall have occurred or failed to occur that prevents the consummation of the Distribution.

(e) The eCOST Common Stock to be distributed in the Distribution shall have been accepted for listing on the Nasdaq National Market, subject to official notice of issuance.

(f) No other events or developments shall have occurred subsequent to the Closing Date that, in the sole judgment of the Board of Directors of PC Mall, would result in the Distribution having a material adverse effect on PC Mall or on the stockholders of PC Mall.

The foregoing conditions are for the sole benefit of PC Mall and shall not give rise to or create any duty on the part of PC Mall or the PC Mall Board of Directors to waive or not waive any such condition.

4.4. Fractional Shares. As soon as practicable after the Distribution Date, PC Mall shall direct the Agent to determine the number of whole shares and fractional shares of eCOST Common Stock allocable to each holder of record or beneficial owner of PC Mall Common Stock as of the Record Date, to aggregate all such fractional shares and sell the whole shares obtained thereby at the direction of PC Mall either to PC Mall, in open market transactions or otherwise, in each case at then prevailing trading prices, and to cause to be distributed to each such holder or for the benefit of each such beneficial owner to which a fractional share shall be allocable such holder’s or owner’s ratable share of the proceeds of such sale, after making appropriate deductions of the amount required to be withheld for U.S. federal income tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale. PC Mall and the Agent shall use commercially reasonable efforts to aggregate the shares of PC Mall Common Stock that may be held by any beneficial owner thereof through more than one account in determining the fractional share allocable to such beneficial owner.

4.5. Adjustment of PC Mall Warrants.

(a) As of the Distribution Date, each warrant to purchase PC Mall Common Stock that is outstanding as of the Record Date and not exercised prior to the Distribution Date

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(each a “PC Mall Warrant”) shall be adjusted as set forth in this Section 4.5. Each PC Mall Warrant shall be converted, as of the Distribution Date, into two warrants: a warrant (the “PC Mall Adjusted Warrant”) to purchase the same number of shares of PC Mall Common Stock covered by the PC Mall Warrant and as to which the PC Mall Warrant has not been exercised as of the Distribution Date, and a warrant (the “eCOST Warrant”) to purchase a number of shares of eCOST Common Stock equal to the PC Mall Warrant times a fraction, the numerator of which is the total number of shares of eCOST Common Stock distributed to PC Mall stockholders in the Distribution and the denominator of which is the total number of shares of PC Mall Common Stock outstanding on the Record Date. The terms of the PC Mall Adjusted Warrant and the eCOST Warrant (other than the exercise price and the number of shares) shall be substantially the same as the PC Mall Warrant.

(b) The exercise prices per share for each PC Mall Adjusted Warrant and the eCOST Warrant shall be established, as set forth in Schedule 4.5 hereto, in a manner so that: (a) the aggregate “intrinsic value” (i.e. the market value of the stock underlying the warrant, less the exercise price of such warrant, multiplied by the number of shares then covered by such warrant) after the Distribution of the PC Mall Adjusted Warrant plus the eCOST Warrant is not greater than the intrinsic value of the related PC Mall Warrant immediately prior to the Distribution, and (b) the ratio of the exercise price per warrant to the market value per share after the Distribution is not lower than the ratio of the exercise price of the PC Mall Warrant to the market value per share of PC Mall Common Stock immediately prior to the Distribution. The determination of the exercise prices for each PC Mall Adjusted Warrant and eCOST Warrant shall be made by PC Mall as advised by its professional advisors.

(c) The eCOST Warrants to be granted pursuant to this Section 4.5 shall be issued by eCOST as soon as practicable following the Distribution Date, and eCOST shall take all corporate action and make all required filings under applicable state blue sky laws and the Securities Act to (i) issue the eCOST Warrants as required under this Section 4.5 and (ii) comply with applicable registration and qualification requirements under the Securities Act and applicable state securities laws (or exemptions from such registration or qualification requirements) with respect to the issuance of such eCOST Warrants and the eCOST Common Stock underlying the eCOST Warrants, subject in each case to the receipt by eCOST of investment representations and other information from the holders of the PC Mall Warrants reasonably necessary to effect such registration or qualification or qualify for an exemption from such registration or qualification requirements.

ARTICLE V

ANCILLARY AGREEMENTS

5.1. Ancillary Agreements. Prior to the date hereof, PC Mall, through its subsidiaries, has provided to eCOST certain services, including administrative services (accounting, human resources, tax services, legal and treasury), inventory management and order fulfillment, credit card processing, information systems operation and administration, advertising services and use of office space pursuant to the Existing Agreements. eCOST, on the one hand, and PC Mall or its Affiliates, on the other hand, will enter into the Ancillary Agreements pursuant to which PC Mall or such Affiliates of PC Mall will provide certain services to eCOST

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on a transitional basis as described in the Ancillary Agreements. Effective as of the date hereof, each of eCOST and PC Mall (or its Affiliates) will execute and deliver each of the Ancillary Agreements.

5.2. Termination of Existing Agreements. Effective as of the date hereof, eCOST shall, and PC Mall shall cause its applicable subsidiary to, mutually terminate each of the Existing Agreements.

ARTICLE VI

MUTUAL RELEASE; INDEMNIFICATION

6.1. Release of Pre-Closing Claims.

(a) Except as provided in Section 6.1(c), effective as of the Closing Date, eCOST does hereby, for itself, its respective Affiliates (other than any member of the PC Mall Group), successors and assigns, and all Persons who at any time prior to the Closing Date have been stockholders, directors, officers, agents or employees of any member of the eCOST Group (in each case, in their respective capacities as such), remise, release and forever discharge each of PC Mall, its respective Affiliates (other than any member of the eCOST Group), successors and assigns, and all Persons who at any time prior to the Closing Date have been stockholders, directors, officers, agents or employees of PC Mall (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any Contract, by operation of law or otherwise, existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Closing Date, including in connection with the transactions and all other activities to implement the IPO or the Distribution, between eCOST and PC Mall (including any contractual arrangements or arrangements existing or alleged to exist between them on or before the Closing Date).

(b) Except as provided in Section 6.1(c), effective as of the Closing Date, PC Mall does hereby, for itself and its Affiliates (other than any member of the eCOST Group), successors and assigns, and all Persons who at any time prior to the Closing Date have been stockholders, directors, officers, agents or employees of any member of the PC Mall Group (in each case, in their respective capacities as such), remise, release and forever discharge eCOST, the respective members of the eCOST Group, their respective Affiliates (other than any member of the PC Mall Group), successors and assigns, and all Persons who at any time prior to the Closing Date have been stockholders, directors, officers, agents or employees of any member of the eCOST Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Closing Date, including in connection with the transactions and all other activities to implement the IPO or the Distribution,

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between eCOST and PC Mall (including any contractual arrangements or arrangements existing or alleged to exist between them on or before the Closing Date).

(c) Nothing contained in Section 6.1(a) or (b) shall impair any right of any Person to enforce this Agreement or any Ancillary Agreement. Nothing contained in Section 6.1(a) or (b) shall release any Person from:

(i) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement;

(ii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of any other Group prior to the Closing Date;

(iii) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value-received basis for work done by a member of one Group at the request or on behalf of a member of another Group;

(iv) any Liability that the parties may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the parties by third Persons, which Liability shall be governed by the provisions of this Article VI and Article VII and, if applicable, the appropriate provisions of the Ancillary Agreements;

(v) in the case of PC Mall or any member of the PC Mall Group, the capital contribution due to eCOST in the amount of $2,543,000 as reflected on the balance sheet of eCOST as of the date hereof;

(vi) in the case of eCOST, outstanding unpaid amounts as of the Closing Date advanced to eCOST for working capital and fixed asset purchases; or

(vii) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 6.1; provided that the parties agree not to bring suit or permit any of their Subsidiaries to bring suit against any Person with respect to any Liability to the extent that such Person would be released with respect to such Liability by this Section 6.1 but for the provisions of this clause (vii).

(d) eCOST shall not make, and shall not permit any member of the eCOST Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against PC Mall or any member of the PC Mall Group or any other Person released pursuant to Section 6.1(a), with respect to any Liabilities released pursuant to Section 6.1(a). PC Mall shall not, and shall not permit any member of the PC Mall Group, to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against eCOST or any member of the eCOST Group, or any other Person released pursuant to Section 6.1(b), with respect to any Liabilities released pursuant to Section 6.1(b).

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(e) It is the intent of each of PC Mall and eCOST by virtue of the provisions of this Section 6.1 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Closing Date, between or among eCOST or any member of the eCOST Group, on the one hand, and PC Mall or any member of the PC Mall Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Closing Date), except as expressly set forth in Section 6.1(c). At any time, at the request of any other party, each party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.

(f) The parties acknowledge that they have been advised by legal counsel, with respect to, and are familiar with, the provisions of California Civil Code Section 1542 (“Section 1542”) which provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

(g) The parties being aware of Section 1542, hereby acknowledge that they may have sustained damages, losses, costs, or expenses which are presently unknown and unsuspected and that such damages, losses, costs or expenses as may have been sustained may give rise to additional damages, losses, costs or expenses in the future. The parties hereby further acknowledge that they have negotiated this Agreement taking into account such presently unsuspected and unknown damages, losses, costs and expenses, and the parties hereby expressly waive any and all rights they may have under Section 1542, to the extent it would otherwise apply, or under any other state or federal statute, rule or common law principle, in law or in equity, of similar effect.

6.2. Indemnification by eCost. Subject to the provisions of this Agreement, eCOST shall indemnify, defend and hold harmless PC Mall, each member of the PC Mall Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “PC Mall Indemnitees”), from and against any and all Liabilities of the PC Mall Indemnitees relating to, arising out of or resulting from any of the following items (without duplication):

(a) the failure of eCOST or any other member of the eCOST Group or any other Person to pay, perform or otherwise promptly discharge any Liabilities of eCOST in accordance with their respective terms, whether prior to or after the Closing Date or the date hereof;

(b) the eCOST Business or any eCOST Liabilities;

(c) any breach by eCOST or any member of the eCOST Group of this Agreement or any of the Ancillary Agreements; and

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(d) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in any IPO Registration Statement or Prospectus, except to the extent such information relates exclusively to (i) the PC Mall Business, (ii) PC Mall’s intentions with respect to the Distribution, or (iii) the terms of the Distribution, including, without limitation, the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing of and conditions to the consummation of the Distribution.

6.3. Indemnification by PC Mall. Subject to the provisions of this Agreement, PC Mall shall indemnify, defend and hold harmless eCOST, each member of the eCOST Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “eCOST Indemnitees”), from and against any and all Liabilities of the eCOST Indemnitees relating to, arising out of or resulting from any of the following items (without duplication):

(a) the failure of PC Mall or any other member of the PC Mall Group or any other Person to pay, perform or otherwise promptly discharge any Liabilities of the PC Mall Group, whether prior to or after the Closing Date or the date hereof;

(b) the PC Mall Business or any PC Mall Liabilities; and

(c) any breach by PC Mall or any member of the PC Mall Group of this Agreement or any of the Ancillary Agreements.

6.4. Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

(a) The parties intend that any Liability subject to indemnification or reimbursement pursuant to this Article VI or Article VII will be net of Insurance Proceeds that actually reduce the amount of the Liability. Accordingly, the amount which any party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification hereunder (an “Indemnitee”) will be reduced by any Insurance Proceeds theretofore actually recovered by or on behalf of the Indemnitee in reduction of the related Liability. If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds had been received, realized or recovered before the Indemnity Payment was made.

(b) An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a “windfall” (i.e., a benefit they would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof. Nothing contained in this Agreement or any Ancillary Agreement shall obligate any member of any Group to seek to collect or recover any Insurance Proceeds.

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6.5. Procedures for Indemnification of Third Party Claims.

(a) If an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a member of the PC Mall Group or the eCOST Group of any claim or of the commencement by any such Person of any Action (collectively, a “Third Party Claim”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 6.2 or 6.3, or any other Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof within twenty (20) days after becoming aware of such Third Party Claim. Any such notice shall describe the Third Party Claim in reasonable detail. Notwithstanding the foregoing, the failure of any Indemnitee or other Person to give notice as provided in this Section 6.5(a) shall not relieve the related Indemnifying Party of its obligations under this Article VI, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice.

(b) An Indemnifying Party may elect to defend (and, unless the Indemnifying Party has specified any reservations or exceptions, to seek to settle or compromise), at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel, any Third Party Claim. Within thirty (30) days after the receipt of notice from an Indemnitee in accordance with Section 6.5(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnitee of its election whether the Indemnifying Party will assume responsibility for defending such Third Party Claim, which election shall specify any reservations or exceptions. After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense of such Indemnitee except as set forth in the next sentence. In the event that the Indemnifying Party has elected to assume the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions in such notice, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

(c) If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnitee of its election as provided in Section 6.5(d), such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party.

(d) Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim without the consent of the Indemnifying Party.

(e) No Indemnifying Party shall consent to entry of any judgment or enter into any settlement of the Third Party Claim without the consent of the Indemnitee if the effect thereof is to permit any injunction, declaratory judgment, other order or other nonmonetary relief to be entered, directly or indirectly, against any Indemnitee.

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6.6. Additional Matters.

(a) Any claim on account of a Liability which does not result from a Third Party Claim shall be asserted by written notice given by the Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such thirty- (30)day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment. If such Indemnifying Party does not respond within such thirty- (30) day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such party as contemplated by this Agreement or the Ancillary Agreements.

(b) In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(c) In the event of an Action in which the Indemnifying Party is not a named defendant, if the Indemnifying Party shall so request, the parties shall endeavor to substitute the Indemnifying Party for the named defendant if at all practicable. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in this Section and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts’ fees and all other external expenses), the costs of any judgment or settlement, and the cost of any interest or penalties relating to any judgment or settlement.

6.7. Remedies Cumulative. The remedies provided in this Article VI shall be cumulative and, subject to the provisions of Article IX, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

6.8. Exclusions. Notwithstanding anything to the contrary in Section 6.2 or Section 6.3, (i) indemnification with respect to Taxes shall be governed exclusively by the Tax Indemnification and Allocation Agreement, (ii) to the extent either of the License Agreements specifically provides indemnification with respect to Third Party Claims for infringement of intellectual property rights, the respective License Agreement shall govern with respect to that indemnification, and (iii) to the extent the Employee Benefit Matters Agreement specifically provides indemnification with respect to certain employee-related eCOST Liabilities, the Employee Benefit Matters Agreement shall govern with respect to that indemnification. To the extent indemnification is not provided in such Ancillary Agreements, the terms of this Agreement shall govern.

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6.9. Limitations of Liability.

(a) The rights of any of PC Mall and eCOST and their respective Indemnitees to indemnification under Sections 6.2 and 6.3 hereof shall be subject to any limitations of liability contained in any Ancillary Agreement.

(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY OR ANY OF ITS GROUP MEMBERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS SUFFERED BY AN INDEMNIFIED PARTY (COLLECTIVELY, “UNFORESEEN DAMAGES”), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER OR THEREUNDER; PROVIDED, HOWEVER, THAT TO THE EXTENT AN INDEMNIFIED PARTY IS REQUIRED TO PAY ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS TO A PERSON WHO IS NOT A MEMBER OF EITHER GROUP IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES AND NOT SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 6.9(b).

6.10. Survival of Indemnities. The rights and obligations of each of PC Mall and eCOST and their respective Indemnitees under this Article VI shall survive the sale or other transfer by any party of any Assets or businesses or the assignment by it of any Liabilities.

ARTICLE VII

INTERIM OPERATIONS AND CERTAIN OTHER MATTERS

7.1. Insurance Matters.

(a) PC Mall and eCOST agree to cooperate in good faith to provide for an orderly transition of insurance coverage from the date hereof through the Distribution Date and for the treatment of any Insurance Policies that will remain in effect following the Closing Date on a mutually agreeable basis. In no event shall PC Mall, any other member of the PC Mall Group or any PC Mall Indemnitee have any liability or obligation whatsoever to any member of the eCOST Group in the event that any Insurance Policy or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for any reason, shall be unavailable or inadequate to cover any Liability of any member of the eCOST Group for any reason whatsoever or shall not be renewed or extended beyond the current expiration date.

(i) Except as otherwise provided in any Ancillary Agreement, the parties intend by this Agreement that eCOST and each other member of the eCOST Group be successors-in-interest to all rights that any member of the eCOST Group may have as of the Closing Date as a subsidiary, affiliate, division or department of PC Mall prior to the Closing Date under any policy of insurance issued to PC Mall by any insurance carrier unaffiliated with PC Mall or under any agreements related to such policies executed and delivered prior to the

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Closing Date, including any rights such member of the eCOST Group may have, as an insured or additional named insured, subsidiary, affiliate, division or department, to avail itself of any such policy of insurance or any such agreements related to such policies as in effect prior to the Closing Date. At the request of eCOST, PC Mall shall take all reasonable steps, including the execution and delivery of any instruments, to effect the foregoing; provided however that PC Mall shall not be required to pay any amounts, waive any rights or incur any Liabilities in connection therewith.

(ii) Except as otherwise contemplated by any Ancillary Agreement, after the Closing Date, none of PC Mall or eCOST or any member of their respective Groups shall, without the consent of the other, provide any such insurance carrier with a release, or amend, modify or waive any rights under any such policy or agreement, if such release, amendment, modification or waiver would adversely affect any rights or potential rights of any member of the other Group thereunder; provided, however that the foregoing shall not (A) preclude any member of any Group from presenting any claim or from exhausting any policy limit, (B) require any member of any Group to pay any premium or other amount or to incur any Liability, or (C) require any member of any Group to renew, extend or continue any policy in force. Each of eCOST and PC Mall will share such information as is reasonably necessary in order to permit the other to manage and conduct its insurance matters in an orderly fashion.

(b) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the PC Mall Group in respect of any Insurance Policy or any other contract or policy of insurance.

(c) eCOST does hereby, for itself and each other member of the eCOST Group, agree that no member of the PC Mall Group or any PC Mall Indemnitee shall have any Liability whatsoever as a result of the insurance policies and practices of PC Mall and its Affiliates as in effect at any time prior to the Closing Date, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy, the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise.

(d) Nothing in this Agreement shall be deemed to restrict any member of the eCOST Group from acquiring at its own expense any other insurance policy in respect of any Liabilities or covering any period.

7.2. Certain Business Matters.

(a) No member of any Group shall have any duty to refrain from (i) engaging in the same or similar activities or lines of business as any member of any other Group, (ii) doing business with any potential or actual supplier or customer of any member of any other Group, or (iii) engaging in, or refraining from, any other activities whatsoever relating to any of the potential or actual suppliers or customers of any member of any other Group.

(b) Each of PC Mall and eCOST is aware that from time to time certain business opportunities may arise which more than one Group may be financially able to

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undertake, and which are, from their nature, in the line of more than one Group’s business and are of practical advantage to more than one Group. In connection therewith, the parties agree that if, following the Closing Date and prior to (but not following) the Distribution Date, any of PC Mall or eCOST acquires knowledge of an opportunity that meets the foregoing standard with respect to more than one Group, none of PC Mall or eCOST shall have any duty to communicate or offer such opportunity to any of the others and may pursue or acquire such opportunity for itself, or direct such opportunity to any other Person.

7.3. Late Payments. Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus two percent (2%).

ARTICLE VIII

FINANCIAL AND OTHER COVENANTS

8.1. Financial and Other Information.

(a) eCOST agrees that, for so long as PC Mall is required to consolidate the results of operations and financial position of eCOST and any other members of the eCOST Group or to account for its investment in eCOST under the equity method of accounting (determined in accordance with generally accepted accounting principles consistently applied and consistent with SEC reporting requirements):

(i) Disclosure and Financial Controls. eCOST will, and will cause each other member of the eCOST Group to, maintain, as of and after the IPO Effective Date, disclosure controls and procedures and internal control over financial reporting as defined in Rule 13a-15 promulgated under the Exchange Act; eCOST will cause each of its principal executive and principal financial officers to sign and deliver certifications to eCOST’s periodic reports and will include the certifications in eCOST’s periodic reports, as and when required pursuant to Rule 13a-14 promulgated under the Exchange Act and Item 601 of Regulation S-K; eCOST will cause its management to evaluate eCOST’s disclosure controls and procedures and internal control over financial reporting (including any change in internal control over financial reporting) as and when required pursuant to Rule 13a-15 promulgated under the Exchange Act; eCOST will disclose in its periodic reports filed with the SEC information concerning eCOST management’s responsibilities for and evaluation of eCOST’s disclosure controls and procedures and internal control over financial reporting (including, without limitation, the annual management report and attestation report of eCOST’s independent auditors relating to internal control over financial reporting) as and when required under Items 307 and 308 of Regulation S-K and other applicable SEC rules; and, without limiting the general application of the foregoing, eCOST will, and will cause each other member of the eCOST Group to, maintain as of and after the IPO Effective Date internal systems and procedures that will provide reasonable assurance that (A) the Financial Statements are reliable and timely prepared in accordance with GAAP and applicable law, (B) all transactions of members of the eCOST Group are recorded as necessary to

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permit the preparation of the Financial Statements, (C) the receipts and expenditures of members of the eCOST Group are authorized at the appropriate level within eCOST, and (D) unauthorized use or disposition of the assets of any member of the eCOST Group that could have material effect on the Financial Statements is prevented or detected in a timely manner.

(ii) Fiscal Year. eCOST will, and will cause each member of the eCOST Group to, maintain a fiscal year that commences and ends on the same calendar days as PC Mall’s fiscal year commences and ends, and to maintain monthly accounting periods that commence and end on the same calendar days as PC Mall’s monthly accounting periods commence and end.

(iii) Monthly Financial Reports. No later than ten (10) business days after the end of the first three (3) monthly accounting periods of eCOST following the IPO Effective Date, eCOST will deliver to PC Mall a consolidated income statement and balance sheet for eCOST for such period and an income statement and balance sheet for each eCOST Affiliate which is consolidated with eCOST, as the case may be, in such format and detail as PC Mall may request, and no later than twelve (12) business days after the end of the first three (3) monthly accounting periods of eCOST following the IPO Effective Date, eCOST will deliver to PC Mall a consolidated statement of cash flows for eCOST for such period and statement of cash flows for each eCOST Affiliate which is consolidated with eCOST, as the case may be, in such format and detail as PC Mall may request. No later than five (5) business days after the end of each monthly accounting period of eCOST thereafter (including the last monthly accounting period of eCOST of each fiscal year), eCOST will deliver to PC Mall a consolidated income statement, balance sheet and statement of cash flows for eCOST for such period and an income statement, balance sheet and statement of cash flows for each eCOST Affiliate which is consolidated with eCOST, as the case may be, in such format and detail as PC Mall may request.

(iv) Quarterly Financial Statements. As soon as practicable, and in any event no later than the earlier of (x) ten (10) business days prior to the date on which eCOST is required to file a Form 10-Q or other document containing Quarterly Financial Statements (as defined below) with the SEC for each of the first three (3) fiscal quarters in each fiscal year of eCOST and (y) five (5) business days prior to the date on which PC Mall has notified eCOST that PC Mall intends to file its Form 10-Q or other document containing quarterly financial statements with the SEC, eCOST will deliver to PC Mall drafts of (A) the consolidated financial statements of the eCOST Group (and notes thereto) for such periods and for the period from the beginning of the current fiscal year to the end of such quarter, setting forth in each case in comparative form for each such fiscal quarter of eCOST the consolidated figures (and notes thereto) for the corresponding quarter and periods of the previous fiscal year and all in reasonable detail and prepared in accordance with Article 10 of Regulation S-X and GAAP, and (B) a discussion and analysis by management of the eCOST Group’s financial condition and results of operations for such fiscal period, including, without limitation, an explanation of any material period-to-period change and any off-balance sheet transactions, all in reasonable detail and prepared in accordance with Item 303(b) of Regulation S-K; provided, however, that eCOST will deliver such information at such earlier time upon PC Mall’s written request with thirty (30) days’ notice resulting from PC Mall’s determination to accelerate the timing of the filing of its financial statements with the SEC. The information set forth in (A) and (B) above is referred to in this Agreement as the “Quarterly Financial Statements.” No later than the earlier of (x) three

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(3) business days prior to the date eCOST publicly files the Quarterly Financial Statements with the SEC or otherwise makes such Quarterly Financial Statements publicly available or (y) three (3) business days prior to the date on which PC Mall has notified eCOST that PC Mall intends to file the PC Mall quarterly financial statements with the SEC, eCOST will deliver to PC Mall the final form of the eCOST Quarterly Financial Statements and certifications thereof by the principal executive and financial officers of eCOST in substantially the forms required under SEC rules for periodic reports and in form and substance satisfactory to PC Mall; provided, however, that eCOST may continue to revise such Quarterly Financial Statements prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by eCOST to PC Mall as soon as practicable, and in any event within eight (8) hours thereafter; provided, further, that PC Mall’s and eCOST’s financial representatives will actively consult with each other regarding any changes (whether or not substantive) which eCOST may consider making to its Quarterly Financial Statements and related disclosures during the two (2) business days immediately prior to any anticipated filing with the SEC, with particular focus on any changes which would have an effect upon PC Mall’s financial statements or related disclosures. In addition to the foregoing, no Quarterly Financial Statement or any other document which refers, or contains information not previously publicly disclosed with respect to the ownership of eCOST by PC Mall, the separation of eCOST from PC Mall or the Distribution will be filed with the SEC or otherwise made public by any eCOST Group member without the prior written consent of PC Mall, which consent shall not be unreasonably withheld. Notwithstanding anything to the contrary in this Section 8.1(a)(iv), eCOST will file its Quarterly Financial Statements with the SEC on the same date that PC Mall files the PC Mall quarterly financial statements with the SEC unless otherwise required by applicable law.

(v) Annual Financial Statements. As soon as practicable, and in any event no later than the earlier of (x) ten (10) business days prior to the date on which eCOST is required to file a Form 10-K or other document containing its Annual Financial Statements with the SEC and (y) ten (10) business days prior to the date on which PC Mall has notified eCOST that PC Mall intends to file its Form 10-K or other document containing annual financial statements with the SEC, eCOST will deliver to PC Mall (A) drafts of the consolidated financial statements of the eCOST Group (and notes thereto) for such year, setting forth in each case in comparative form the consolidated figures (and notes thereto) for the previous fiscal year and all in reasonable detail and prepared in accordance with Regulation S-X and GAAP, and (B) a discussion and analysis by management of the eCOST Group’s financial condition and results of operations for such year, including, without limitation, an explanation of any material period-to-period change and any off-balance sheet transactions, all in reasonable detail and prepared in accordance with Item 303(a) of Regulation S-K. The information set forth in (A) and (B) above is referred to in this Agreement as the “Annual Financial Statements.” eCOST will deliver to PC Mall all revisions to such drafts as soon as any such revisions are prepared or made. No later than the earlier of (x) five (5) business days prior to the date eCOST publicly files the Annual Financial Statements with the SEC or otherwise makes such Annual Financial Statements publicly available or (y) five (5) business days prior to the date on which PC Mall has notified eCOST that PC Mall intends to file the PC Mall annual financial statements with the SEC, eCOST will deliver to PC Mall the final form of the eCOST Annual Financial Statements and certifications thereof by the principal executive and financial officers of eCOST in substantially the forms required under SEC rules for periodic reports and in form and substance satisfactory to

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PC Mall; provided, however, that eCOST may continue to revise such Annual Financial Statements prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by eCOST to PC Mall as soon as practicable, and in any event within eight (8) hours thereafter; provided, further, that PC Mall and eCOST financial representatives will actively consult with each other regarding any changes (whether or not substantive) which eCOST may consider making to its Annual Financial Statements and related disclosures during the three (3) business days immediately prior to any anticipated filing with the SEC, with particular focus on any changes which would have an effect upon PC Mall’s financial statements or related disclosures. In addition to the foregoing, no Annual Financial Statement or any other document which refers, or contains information not previously publicly disclosed with respect, to the ownership of eCOST by PC Mall, the separation of eCOST from PC Mall or the Distribution will be filed with the SEC or otherwise made public by any eCOST Group member without the prior written consent of PC Mall, which consent shall not be unreasonably withheld. In any event, eCOST will deliver to PC Mall, no later than three (3) days prior to the date on which PC Mall has notified eCOST that PC Mall intends to file the PC Mall annual financial statements with the SEC, the final form of the Annual Financial Statements accompanied by an opinion thereon by eCOST’s independent certified public accountants. Notwithstanding anything to the contrary in this Section 8.1(a)(v), eCOST will file its Annual Financial Statements with the SEC on the same date that PC Mall files the PC Mall annual financial statements with the SEC unless otherwise required by applicable law.

(vi) Affiliate Financial Statements. eCOST will deliver to PC Mall all Quarterly and Annual Financial Statements of each eCOST Affiliate which is itself required to file financial statements with the SEC or otherwise make such financial statements publicly available, with such financial statements to be provided in the same manner and detail and on the same time schedule as those financial statements of eCOST required to be delivered to PC Mall pursuant to this Section 8.1.

(vii) Conformance with PC Mall Financial Presentation. All information provided by any eCOST Group member to PC Mall or filed with the SEC pursuant to Section 8.1(a)(iii) through (vi) inclusive will be consistent in terms of format and detail and otherwise with PC Mall’s policies with respect to the application of GAAP and practices in effect on the IPO Effective Date with respect to the provision of such financial information by such eCOST Group member to PC Mall (and, where appropriate, as presently presented in financial reports to PC Mall’s Board of Directors), with such changes therein as may be requested by PC Mall from time to time consistent with changes in such accounting principles and practices.

(viii) eCOST Reports Generally. Each eCOST Group member that files information with the SEC will deliver to PC Mall: (A) substantially final drafts, as soon as the same are prepared, of (x) all reports, notices and proxy and information statements to be sent or made available by such eCOST Group member to its respective security holders, (y) all regular, periodic and other reports to be filed or furnished under Sections 13, 14 and 15 of the Exchange Act (including Reports on Forms 10-K, 10-Q and 8-K and Annual Reports to Shareholders), and (z) all registration statements and prospectuses to be filed by such eCOST Group member with the SEC or any securities exchange pursuant to the rules, regulations and listing requirements (or similar requirements) of such exchange (collectively, the documents identified in clauses (x), (y)

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and (z) are referred to in this Agreement as “eCOST Public Documents”), and (B) as soon as practicable, but in no event later than four (4) business days (other than with respect to reports on Form 8-K) prior to the earliest of the dates the same are printed, sent or filed, current drafts of all such eCOST Public Documents and, with respect to reports on Form 8-K, as soon as practicable, but in no event later than two (2) business days prior to the earliest of the dates the same are printed, sent or filed in the case of planned 8-K reports and as soon as practicable, but in no event less than two (2) hours in the case of unplanned 8-K reports; provided, however, that eCOST may continue to revise such eCOST Public Documents prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by eCOST to PC Mall as soon as practicable, and in any event within eight (8) hours thereafter; provided, further, that PC Mall and eCOST financial Representatives will actively consult with each other regarding any changes (whether or not substantive) which eCOST may consider making to any of its eCOST Public Documents and related disclosures prior to any anticipated filing with the SEC, with particular focus on any changes which would have an effect upon PC Mall’s financial statements or related disclosures. In addition to the foregoing, no eCOST Public Document or any other document which refers, or contains information not previously publicly disclosed with respect, to the ownership of eCOST by PC Mall, the separation of eCOST from PC Mall or the Distribution will be filed with the SEC or otherwise made public by any eCOST Group member without the prior written consent of PC Mall, which consent shall not be unreasonably withheld.

(ix) Budgets and Financial Projections. eCOST will, as promptly as practicable, deliver to PC Mall copies of all annual and other budgets and financial projections (consistent in terms of format and detail and otherwise required by PC Mall) relating to eCOST on a consolidated basis and will provide PC Mall an opportunity to meet with management of eCOST to discuss such budgets and projections.

(x) Other Information. With reasonable promptness, eCOST will deliver to PC Mall such additional financial and other information and data with respect to the eCOST Group and their business, properties, financial positions, results of operations and prospects as from time to time may be reasonably requested by PC Mall.

(xi) Press Releases and Similar Information. eCOST and PC Mall will consult with each other as to the timing of their annual and quarterly earnings releases and any interim financial guidance for a current or future period and will give each other the opportunity to review the information therein relating to the eCOST Group and to comment thereon. PC Mall and eCOST will make reasonable efforts to issue their respective annual and quarterly earnings releases at approximately the same time on the same date. No later than eight (8) hours prior to the time and date that a party intends to publish its regular annual or quarterly earnings release or any financial guidance for a current or future period, such party will deliver to the other party copies of substantially final drafts of all press releases and other statements to be made available by any member of that party’s Group to employees of any member of that party’s Group or to the public concerning any matters that could be reasonably likely to have a material financial impact on the earnings, results of operations, financial condition or prospects of any eCOST Group member. In addition, prior to the issuance of any such press release or public statement that meets the criteria set forth in the preceding two sentences, the issuing party will consult with the other party regarding any changes (other than typographical or other similar

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minor changes) to such substantially final drafts. Immediately following the issuance thereof, the issuing party will deliver to the other party copies of final drafts of all press releases and other public statements.

(xii) Cooperation on PC Mall Filings. eCOST will cooperate fully, and cause eCOST’s Auditors to cooperate fully, with PC Mall to the extent requested by PC Mall in the preparation of PC Mall’s public earnings or other press releases, Quarterly Reports on Form 10-Q, Annual Reports to Shareholders, Annual Reports on Form 10-K, any Current Reports on Form 8-K and any other proxy, information and registration statements, reports, notices, prospectuses and any other filings made by PC Mall with the SEC, any national securities exchange or otherwise made publicly available (collectively, the “PC Mall Public Filings”). eCOST agrees to provide to PC Mall all information that PC Mall reasonably requests in connection with any PC Mall Public Filings or that, in the judgment of PC Mall’s legal department, is required to be disclosed or incorporated by reference therein under any law, rule or regulation. eCOST will provide such information in a timely manner on the dates requested by PC Mall (which may be earlier than the dates on which eCOST otherwise would be required hereunder to have such information available) to enable PC Mall to prepare, print and release all PC Mall Public Filings on such dates as PC Mall will determine but in no event later than as required by applicable law. eCOST will use commercially reasonable efforts to cause eCOST’s Auditors to consent to any reference to them as experts in any PC Mall Public Filings required under any law, rule or regulation. If and to the extent requested by PC Mall, eCOST will diligently and promptly review all drafts of such PC Mall Public Filings and prepare in a diligent and timely fashion any portion of such PC Mall Public Filing pertaining to eCOST. Prior to any printing or public release of any PC Mall Public Filing, an appropriate executive officer of eCOST will, if requested by PC Mall, certify that the information relating to any eCOST Group member in such PC Mall Public Filing is accurate, true, complete and correct in all material respects. Unless required by law, rule or regulation, eCOST will not publicly release any financial or other information which conflicts with the information with respect to any eCOST Group member that is included in any PC Mall Public Filing without PC Mall’s prior written consent. Prior to the release or filing thereof, PC Mall will provide eCOST with a draft of any portion of a PC Mall Public Filing containing information relating to the eCOST Group and will give eCOST an opportunity to review such information and comment thereon; provided that PC Mall will determine in its sole and absolute discretion the final form and content of all PC Mall Public Filings.

(b) Auditors and Audits; Annual Statements and Accounting. eCOST agrees that, for so long as PC Mall is required to consolidate eCOST’s results of operations and financial position or to account for its investment in eCOST under the equity method of accounting (in accordance with GAAP):

(i) Audit Timing. eCOST will use commercially reasonable efforts to enable eCOST’s independent public accountants (“eCOST’s Auditors”) to complete their audit such that they will date their opinion on the Annual Financial Statements on the same date that PC Mall’s independent certified public accountants (“PC Mall’s Auditors”) date their opinion on PC Mall’s audited annual financial statements (the “PC Mall Annual Statements”), and to enable PC Mall to meet its timetable for the printing, filing and public dissemination of the PC Mall

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Annual Statements, all in accordance with Section 8.1(a) hereof and as required by applicable law.

(ii) Information Needed by PC Mall. eCOST will provide to PC Mall on a timely basis all information that PC Mall reasonably requires to meet its schedule for the preparation, printing, filing, and public dissemination of the PC Mall Annual Statements in accordance with Section 8.1(a) hereof and as required by applicable law. Without limiting the generality of the foregoing, eCOST will provide all required financial information with respect to the eCOST Group to eCOST’s Auditors in a sufficient and reasonable time and in sufficient detail to permit eCOST’s Auditors to take all steps and perform all reviews necessary to provide sufficient assistance to PC Mall’s Auditors with respect to information to be included or contained in the PC Mall Annual Statements.

(iii) Access to eCOST Auditors. eCOST will authorize eCOST’s Auditors to make available to PC Mall’s Auditors both the personnel who performed, or are performing, the annual audit of eCOST and work papers related to the annual audit of eCOST, in all cases within a reasonable time prior to eCOST’s Auditors’ opinion date, so that PC Mall’s Auditors are able to perform the procedures they consider necessary to take responsibility for the work of eCOST’s Auditors as it relates to PC Mall’s Auditors’ report on PC Mall’s statements, all within sufficient time to enable PC Mall to meet its timetable for the printing, filing and public dissemination of the PC Mall Annual Statements.

(iv) Access to Records. If PC Mall determines in good faith that there may be some inaccuracy in an eCOST Group member’s financial statements or deficiency in an eCOST Group member’s internal accounting controls or operations that could materially impact PC Mall’s financial statements, at PC Mall’s request, eCOST will provide PC Mall’s internal auditors with access to the eCOST Group’s books and records so that PC Mall may conduct reasonable audits relating to the financial statements provided by eCOST under this Agreement as well as to the internal accounting controls and operations of the eCOST Group.

(v) Notice of Changes. Subject to Section 8.1(a)(vi), eCOST will give PC Mall as much prior notice as reasonably practicable of any proposed determination of, or any significant changes in, eCOST’s accounting estimates or accounting principles from those in effect on the Effective Date. eCOST will consult with PC Mall and, if requested by PC Mall, eCOST will consult with PC Mall’s Auditors with respect thereto. eCOST will not make any such determination or changes without PC Mall’s prior written consent if such a determination or a change would be sufficiently material to be required to be disclosed in eCOST’s or PC Mall’s financial statements as filed with the SEC or otherwise publicly disclosed therein.

(vi) Accounting Changes Requested by PC Mall. Notwithstanding clause (vi) above, eCOST will make any changes in its accounting estimates or accounting principles that are requested by PC Mall in order for eCOST’s accounting practices and principles to be consistent with those of PC Mall.

(vii) Special Reports of Deficiencies or Violations. eCOST will report in reasonable detail to PC Mall the following events or circumstances promptly after any executive officer of eCOST or any member of the eCOST Board of Directors becomes aware of

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such matter: (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect eCOST’s ability to record, process, summarize and report financial information; (B) any fraud, whether or not material, that involves management or other employees who have a significant role in eCOST’s internal control over financial reporting; (C) any illegal act within the meaning of Section 10A(b) and (f) of the Exchange Act; and (D) any report of a material violation of law that an attorney representing any eCOST Group member has formally made to any officers or directors of eCOST pursuant to the SEC’s attorney conduct rules (17 C.F.R. Part 205).

ARTICLE IX

EXCHANGE OF INFORMATION; CONFIDENTIALITY

9.1. Agreement for Exchange of Information, Archives.

(a) Each of PC Mall and eCOST, on behalf of its respective Group, agrees to provide, or cause to be provided, to the other Group, at any time before or after the Distribution Date, as soon as reasonably practicable after written request therefor, any Information in the possession or under the control of such Group which the requesting party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting party (including under applicable securities or tax laws) by a Governmental Authority having jurisdiction over the requesting party, (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation, tax or other similar requirements, or (iii) to comply with its obligations under this Agreement or any Ancillary Agreement; provided, however, that in the event that any party determines that any such provision of Information could be commercially detrimental, violate any law or agreement, or waive any attorney client privilege, the parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.

(b) After the Closing Date, eCOST shall have access during regular business hours (as in effect from time to time) to the documents and objects of historic significance that relate to the business of eCOST that are located in the PC Mall Records. eCOST may obtain copies (but not originals) of documents for bona fide business purposes and may obtain objects for exhibition purposes for commercially reasonable periods of time if required for bona fide business purposes, provided that eCOST shall cause any such objects to be returned promptly in the same condition in which they were delivered to eCOST and eCOST shall comply with any rules, procedures or other requirements, and shall be subject to any restrictions (including prohibitions on removal of specified objects), that are then applicable to PC Mall. Nothing herein shall be deemed to restrict the access of any member of the PC Mall Group to any such documents or objects or to impose any liability on any member of the PC Mall Group if any such documents or objects are not maintained or preserved by PC Mall.

(c) After the date hereof, (i) eCOST shall maintain in effect at its own cost and expense adequate systems and controls to the extent necessary to enable the members of the PC Mall Group to satisfy their respective reporting, accounting, audit and other obligations, and (ii) eCOST shall provide, or cause to be provided, to PC Mall in such form as PC Mall shall request, at no charge to PC Mall, all financial and other data and information as PC Mall

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determines necessary or advisable in order to prepare PC Mall financial statements and reports or filings with any Governmental Authority.

9.2. Ownership of Information. Any Information owned by one Group that is provided to a requesting party pursuant to Article VIII or Section 9.1 shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

9.3. Compensation for Providing Information. The party requesting such Information agrees to reimburse the other party for the reasonable costs, if any, of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting party. Except as may be otherwise specifically provided elsewhere in this Agreement or in any other agreement between the parties, such costs shall be computed in accordance with the providing party’s standard methodology and procedures.

9.4. Record Retention. To facilitate the possible exchange of Information pursuant to this Article IX and other provisions of this Agreement after the Distribution Date, the parties agree to use commercially reasonable efforts to retain all Information in their respective possession or control on the Distribution Date in accordance with the policies of PC Mall as in effect on the Closing Date. No party will destroy, or permit any of its Subsidiaries to destroy, any Information which the other party may have the right to obtain pursuant to this Agreement prior to the third anniversary of the date hereof without first using commercially reasonable efforts to notify the other party of the proposed destruction and giving the other party the opportunity to take possession of such information prior to such destruction; provided, however, that in the case of any Information relating to Taxes or to Environmental Liabilities, such period shall be extended to the expiration of the applicable statute of limitations (giving effect to any extensions thereof).

9.5. Limitation of Liability. No party shall have any liability to any other party in the event that any Information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate, in the absence of willful misconduct by the party providing such Information. No party shall have any liability to any other party if any Information is destroyed after commercially reasonable efforts by such party to comply with the provisions of Section 9.4.

9.6. Other Agreements Providing for Exchange of Information. The rights and obligations granted under this Article IX are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in any Ancillary Agreement.

9.7. Production of Witnesses, Records, Cooperation.

(a) After the Closing Date, except in the case of an adversarial Action by one party against another party, each party hereto shall use commercially reasonable efforts to make available to each other party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as

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witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action in which the requesting party may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder. The requesting party shall bear all costs and expenses in connection therewith.

(b) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third Party Claim, the other parties shall make available to such Indemnifying Party or such other party, as the case may be, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be, and shall otherwise cooperate in such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be.

(c) Without limiting the foregoing, the parties shall cooperate and consult to the extent reasonably necessary with respect to any Actions.

(d) Without limiting any provision of this Section, each of the parties agrees to cooperate, and to cause each member of its respective Group to cooperate, with each other in the defense of any infringement or similar claim with respect to any intellectual property and shall not claim to acknowledge, or permit any member of its respective Group to claim to acknowledge, the validity or infringing use of any intellectual property of a third Person in a manner that would hamper or undermine the defense of such infringement or similar claim.

(e) The obligation of the parties to provide witnesses pursuant to this Section 9.7 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses inventors and other officers without regard to whether the witness or the employer of the witness could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 9.7(a)).

(f) In connection with any matter contemplated by this Section 9.7, the parties will enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege or work product immunity of any member of any Group.

9.8. Confidentiality.

(a) Subject to Section 9.9, each of PC Mall and eCOST, on behalf of itself and each member of its respective Group, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that applies to PC Mall’s confidential

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and proprietary information pursuant to policies in effect as of the Closing Date, all Information concerning each such other Group that is either in its possession (including Information in its possession prior to any of the date hereof, the Closing Date or the Distribution Date) or furnished by any such other Group or its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement or any Ancillary Agreement or otherwise, and shall not use any such Information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Information has been (i) in the public domain through no fault of such party or any member of such Group or any of their respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives, (ii) later lawfully acquired from other sources by such party (or any member of such party’s Group) which sources are not themselves bound by a confidentiality obligation), or (iii) independently generated without reference to any proprietary or confidential Information of the other party.

(b) Each party agrees not to release or disclose, or permit to be released or disclosed, any such Information to any other Person, except its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Information (who shall be advised of their obligations hereunder with respect to such Information), except in compliance with Section 9.9. Without limiting the foregoing, when any Information is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, each party will promptly after request of the other party either return to the other party all Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon), provided that any costs and expenses relating to the return or destruction of such Information shall be borne by the party requesting such return or destruction.

9.9. Protective Arrangements. In the event that any party or any member of its Group either determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable law or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of any other party (or any member of any other party’s Group) that is subject to the confidentiality provisions hereof, such party shall notify the other party prior to disclosing or providing such Information and shall cooperate at the expense of the requesting party in seeking any reasonable protective arrangements requested by such other party. Subject to the foregoing, the Person that received such request may thereafter disclose or provide Information to the extent required by such law (as so advised by counsel) or by lawful process or such Governmental Authority.

ARTICLE X

ARBITRATION; DISPUTE RESOLUTION

10.1. Agreement to Arbitrate. Except as otherwise specifically provided in any Ancillary Agreement, the procedures for discussion, negotiation and arbitration set forth in this Article X shall apply to all disputes, controversies or claims (whether sounding in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement or any Ancillary Agreement, or the transactions contemplated hereby or thereby

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(including all actions taken in furtherance of the transactions contemplated hereby or thereby on or prior to the date hereof), or the commercial or economic relationship of the parties relating hereto or thereto, between or among any member of the PC Mall Group and the eCOST Group. Each party agrees on behalf of itself and each member of its respective Group that the procedures set forth in this Article X shall be the sole and exclusive remedy in connection with any dispute, controversy or claim relating to any of the foregoing matters and irrevocably waives any right to commence any Action in or before any Governmental Authority, except as expressly provided in Sections 10.7(b) and 10.8 and except to the extent provided under the Arbitration Act in the case of judicial review of arbitration results or awards. Each party on behalf of itself and each member of its respective Group irrevocably waives any right to any trial by jury with respect to any claim, controversy or dispute set forth in the first sentence of this Section 10.1.

10.2. Escalation.

(a) It is the intent of the parties to use commercially reasonable efforts to resolve expeditiously any dispute, controversy or claim between or among them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, any party involved in a dispute, controversy or claim shall deliver a notice (an “Escalation Notice”) demanding an in person meeting involving representatives of the parties at a senior level of management of the parties (or if the parties agree, of the appropriate strategic business unit or division within such entity). A copy of any such Escalation Notice shall be given to the Chief Financial Officer, or like officer or official, of each party involved in the dispute, controversy or claim (which copy shall state that it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedure for such discussions or negotiations between the parties may be established by the parties from time to time; provided, however, that the parties shall use commercially reasonable efforts to meet within thirty (30) days of the Escalation Notice.

(b) The parties may, by mutual consent, retain a mediator to aid the parties in their discussions and negotiations by informally providing advice to the parties. Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the parties, nor shall any opinion expressed by the mediator be admissible in any arbitration proceedings. The mediator may be chosen from a list of mediators previously selected by the parties or by other agreement of the parties. Costs of the mediation shall be borne equally by the parties involved in the matter, except that each party shall be responsible for its own expenses. Mediation is not a prerequisite to a demand for arbitration under Section 10.3.

10.3. Arbitration. At any time after the first to occur of (i) the date of the meeting actually held pursuant to the applicable Escalation Notice or (ii)forty-five days after the delivery of the Escalation Notice, any party involved in the dispute, controversy, or claim may make a written demand that the dispute be resolved by binding arbitration (the ”Arbitration Demand Notice”). The Arbitration Demand Notice shall be given to the parties to the dispute, controversy, or claim in the manner set forth in Section 13.5. Subject to Sections 10.7(d) and 10.8, upon delivery of an Arbitration Demand Notice pursuant to this section, the dispute, controversy, or claim shall be decided by a sole arbitrator in accordance with the rules set forth in this Article X.

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10.4. Arbitrator.

(a) Within fifteen (15) days after a valid Arbitration Demand Notice is given, the parties involved in the dispute, controversy, or claim referenced therein shall attempt to select a sole arbitrator satisfactory to all such parties from the JAMS panel.

(b) If the parties are unable to jointly select a join arbitrator from the JAMS panel within such fifteen (15) day period, then within thirty (30) days after delivery of the Arbitration Demand Notice each party shall select one person from the JAMS panel to act as arbitrator. The arbitrators selected by each party shall then select an additional arbitrator within ten (10) days of their appointment. Such additional arbitrator shall act as the sole arbitrator of the matter. In the event the arbitrators selected by the parties are unable or fail to agree on the additional arbitrator, the additional arbitrator shall be selected by JAMS within ten (10) days.The parties may, by mutual consent, retain a mediator to aid the parties in their discussions and negotiations by informally providing advice to the parties. Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the parties, nor shall any opinion expressed by the mediator be admissible in any arbitration proceedings. The mediator may be chosen from a list of mediators previously selected by the parties or by other agreement of the parties. Costs of the mediation shall be borne equally by the parties involved in the matter, except that each party shall be responsible for its own expenses. Mediation is not a prerequisite to a demand for arbitration under Section 10.3.

(c) The sole arbitrator selected pursuant to paragraph (a) or (b) above will set a time for the hearing of the matter which will commence no later than ninety (90) days after the date of the appointment of the sole arbitrator pursuant to paragraph (a) or (b) above. The arbitration hearing will be no longer than thirty (30) days (unless in the judgment of the arbitrator the matter is unusually complex and sophisticated and thereby requires a longer time, in which event such hearing shall be no longer than ninety (90) days). The final decision of such arbitrator will be rendered in writing to the parties not later than sixty (60) days after the last hearing date, unless otherwise agreed by the parties in writing.

(d) The place of any arbitration hereunder will be in Los Angeles, California, unless otherwise agreed by the parties.

10.5. Hearings. Within the time period specified in Section 10.4 (c), the matter shall be presented to the arbitrator at a hearing by means of written submissions of memoranda and verified witness statements, filed simultaneously, and responses, if necessary in the judgment of the arbitrator or the parties. If the arbitrator deems it to be essential to a fair resolution of the dispute, live cross-examination or direct examination may be permitted, but it is not generally contemplated to be necessary. The arbitrator shall actively manage the arbitration with a view to achieving a just, speedy, and cost-effective resolution of the dispute, claim or controversy. The arbitrator may, in his or her discretion, set time and other limits on the presentation of each party’s case, its memoranda or other submissions, and refuse to receive any proffered evidence, which the arbitrator, in his or her discretion, finds to be cumulative, unnecessary, irrelevant or of low probative nature. Except as otherwise set forth herein, any arbitration hereunder will be conducted in accordance with the JAMS Comprehensive Arbitration Rules and Procedures then prevailing. Except as expressly set forth in Section

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10.8(b), the decision of the arbitrator will be final and binding on the parties, and judgment thereon may be had and will be enforceable in any court having jurisdiction over the parties. Arbitration awards will bear interest at an annual rate of the Prime Rate plus 2% per annum. To the extent that the provisions of this Agreement and the prevailing rules of JAMS conflict, the provisions of this Agreement shall govern.

10.6. Discovery and Certain Other Matters.

(a) Any party involved in the applicable dispute may request limited document production from the other party or parties of specific and expressly relevant documents, with the reasonable expenses of the producing party incurred in such production paid by the requesting party. Any such discovery (which rights to documents shall be substantially less than document discovery rights prevailing under the Federal Rules of Civil Procedure) shall be conducted expeditiously and shall not cause the hearing provided for in Section 10.5 to be adjourned except upon consent of all parties involved in the applicable dispute or upon an extraordinary showing of cause demonstrating that such adjournment is necessary to permit discovery essential to a party to the proceeding. Depositions, interrogatories or other forms of discovery (other than the document production set forth above) shall not occur except by consent of the parties involved in the applicable dispute. Disputes concerning the scope of document production and enforcement of the document production requests will be determined by written agreement of the parties involved in the applicable dispute or, failing such agreement, will be referred to the arbitrator for resolution. All discovery requests will be subject to the proprietary rights and rights of privilege of the parties, and the arbitrator will adopt procedures to protect such rights and to maintain the confidential treatment of the arbitration proceedings (except as may be required by law). Subject to the foregoing, the arbitrator shall have the power to issue subpoenas to compel the production of documents relevant to the dispute, controversy or claim.

(b) The arbitrator shall have full power and authority to determine issues of arbitrability but shall otherwise be limited to interpreting or construing the applicable provisions of this Agreement or any Ancillary Agreement, and will have no authority or power to limit, expand, alter, amend, modify, revoke or suspend any condition or provision of this Agreement or any Ancillary Agreement; it being understood, however, that the arbitrator will have full authority to implement the provisions of this Agreement or any Ancillary Agreement, and to fashion appropriate remedies for breaches of this Agreement (including interim or permanent injunctive relief); provided that the arbitrator shall not have (i) any authority in excess of the authority a court having jurisdiction over the parties and the controversy or dispute would have absent these arbitration provisions or (ii) any right or power to award punitive or treble damages. It is the intention of the parties that in rendering a decision the arbitrator give effect to the applicable provisions of this Agreement and the Ancillary Agreements and follow applicable law (it being understood and agreed that this sentence shall not give rise to a right of judicial review of the arbitrator’s award).

(c) If a party fails or refuses to appear at and participate in an arbitration hearing after due notice, the arbitrator may hear and determine the controversy upon evidence produced by the appearing party.

(d) Arbitration costs will be borne equally by each party involved in the matter, except that each party will be responsible for its own attorney’s fees and other costs and expenses, including the costs of witnesses selected by such party.

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10.7. Certain Additional Matters.

(a) Any arbitration award shall be a bare award limited to a holding for or against a party and shall be without findings as to facts, issues or conclusions of law (including with respect to any matters relating to the validity or infringement of patents or patent applications) and shall be without a statement of the reasoning on which the award rests, but must be in adequate form so that a judgment of a court may be entered thereupon. Judgment upon any arbitration award hereunder may be entered in any court having jurisdiction thereof.

(b) Prior to the time at which an arbitrator is appointed pursuant to Section 10.4, any party may seek one or more temporary restraining orders in a court of competent jurisdiction if necessary in order to preserve and protect the status quo. Neither the request for, or grant or denial of, any such temporary restraining order shall be deemed a waiver of the obligation to arbitrate as set forth herein and the arbitrator may dissolve, continue or modify any such order. Any such temporary restraining order shall remain in effect until the first to occur of the expiration of the order in accordance with its terms or the dissolution thereof by the arbitrator.

(c) Except as required by law, the parties shall hold, and shall cause their respective officers, directors, employees, agents and other representatives to hold, the existence, content and result of mediation or arbitration in confidence in accordance with the provisions of Article IX and except as may be required in order to enforce any award. Each of the parties shall request that any mediator or arbitrator comply with such confidentiality requirement.

(d) In the event that at any time the sole arbitrator shall fail to serve as an arbitrator for any reason, the parties shall select a new arbitrator who shall be disinterested as to the parties and the matter in accordance with the procedures set forth herein for the selection of the initial arbitrator. The extent, if any, to which testimony previously given shall be repeated or as to which the replacement arbitrator elects to rely on the stenographic record (if there is one) of such testimony shall be determined by the replacement arbitrator.

10.8. Limited Court Actions.

(a) Notwithstanding anything herein to the contrary, in the event that any party reasonably determines the amount in controversy in any dispute, controversy or claim (or any series of related disputes, controversies or claims) under this Agreement or any Ancillary Agreement is, or is reasonably likely to be, in excess of $5 million and if such party desires to commence an Action in lieu of complying with the arbitration provisions of this Article X, such party shall so state in its Arbitration Demand Notice. If the other parties to the arbitration do not agree that the amount in controversy in such dispute, controversy or claim (or such series of related disputes, controversies or claims) is, or is reasonably likely to be, in excess of $5 million, the arbitrator selected pursuant to Section 10.4 hereof shall decide whether the amount in controversy in such dispute, controversy or claim (or such series of related disputes, controversies or claims) is, or is reasonably likely to be, in excess of Five Million Dollars ($5,000,000). The arbitrator shall set a date that is no later than ten days after the date of his or her appointment for submissions by the parties with respect to such issue. There shall not be any discovery in connection with such issue. The arbitrator shall render his or her decision on such

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issue within five (5) days of such date so set by the arbitrator. In the event that the arbitrator determines that the amount in controversy in such dispute, controversy or claim (or such series of related disputes, controversies or claims) is or is reasonably likely to be in excess of Five Million Dollars ($5,000,000), the provisions of Sections 10.4(c) and (d), 10.5, 10.6, 10.7 and 10.10 hereof shall not apply and on or before (but, except as expressly set forth in Section 10.8(b), not after) the tenth business day after the date of such decision, any party to the arbitration may elect, in lieu of arbitration, to commence an Action with respect to such dispute, controversy or claim (or such series of related disputes, controversies or claims) in any court of competent jurisdiction. If the arbitrator does not so determine, the provisions of this Article X (including with respect to time periods) shall apply as if no determinations were sought or made pursuant to this Section 10.8(a).

(b) In the event that an arbitration award in excess of Five Million Dollars ($5,000,000) is issued in any arbitration proceeding commenced hereunder, any party may, within sixty (60) days after the date of such award, submit the dispute, controversy or claim (or series of related disputes, controversies or claims) giving rise thereto to a court of competent jurisdiction, regardless of whether such party or any other party sought to commence an Action in lieu of proceeding with arbitration in accordance with Section 10.8(a). In such event, the applicable court may elect to rely on the record developed in the arbitration or, if it determines that it would be advisable in connection with the matter, allow the parties to seek additional discovery or to present additional evidence. Each party shall be entitled to present arguments to the court with respect to whether any such additional discovery or evidence shall be permitted and with respect to all other matters relating to the applicable dispute, controversy or claim (or series of related disputes, controversies or claims).

10.9. Continuity of Service and Performance. Unless otherwise agreed in writing, the parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article X with respect to all matters not subject to such dispute, controversy or claim.

10.10. Law Governing Arbitration Procedures. The interpretation of the provisions of this Article X, only insofar as they relate to the agreement to arbitrate and any procedures pursuant thereto, shall be governed by the Arbitration Act and other applicable federal law. In all other respects, the interpretation of this Agreement shall be governed as set forth in Section 13.2.

ARTICLE XI

FURTHER ASSURANCES AND ADDITIONAL COVENANTS

11.1. Further Assurances.

(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto shall use commercially reasonable efforts, prior to, on and after the Closing Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws, regulations and

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agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, prior to, on and after the Closing Date, each party hereto shall cooperate with the other parties, and without any further consideration, but at the expense of the requesting party, to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument and to take all such other actions as such party may reasonably be requested to take by any other party hereto from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each party will, at the reasonable request, cost and expense of any other party, take such other actions as may be reasonably necessary to vest in such other party good and marketable title, free and clear of any Security Interest, if and to the extent it is practicable to do so.

(c) On or prior to the Closing Date, PC Mall and eCOST in their respective capacities as direct and indirect stockholders of their respective Subsidiaries, shall each ratify any actions which are reasonably necessary or desirable to be taken by PC Mall, eCOST or any other Subsidiary of PC Mall, as the case may be, to effectuate the transactions contemplated by this Agreement.

(d) PC Mall and eCOST, and each of the members of their respective Groups, waive (and agree not to assert against any of the others) any claim or demand that any of them may have against any of the others for any Liabilities or other claims relating to or arising out of: (i) the failure of eCOST or any member of the eCOST Group, on the one hand, or of PC Mall or any member of the PC Mall Group, on the other hand, to provide any notification or disclosure required under any state Environmental Law in connection with the transactions contemplated by this Agreement, or (ii) any inadequate, incorrect or incomplete notification or disclosure under any such state Environmental Law by the applicable transferor.

(e) Prior to the Closing Date, if one or more of the parties identifies any commercial or other service that is needed to assure a smooth and orderly transition of the businesses in connection with the consummation of the transactions contemplated hereby, and that is not otherwise governed by the provisions of this Agreement or any Ancillary Agreement, the parties will cooperate in determining whether there is a mutually acceptable arm’s-length basis on which one or more of the other parties will provide such service.

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ARTICLE XII

TERMINATION

12.1. Termination by Mutual Consent. This Agreement may be terminated at any time prior to the Distribution Date by the mutual consent of PC Mall and eCOST.

12.2. Other Termination. This Agreement may be terminated by PC Mall in its sole discretion at any time prior to the Closing Date. The obligations of the parties under Article IV (including the obligation to pursue or effect the Distribution) may be terminated by PC Mall if (i) at any time after the Closing Date PC Mall determines, in its sole and absolute discretion, that the Distribution would not be in the best interests of PC Mall or its stockholders or (ii) the Distribution has not occurred by December 31, 2005.

12.3. Effect of Termination.

(a) In the event of any termination of this Agreement prior to the Closing Date, no party to this Agreement (or any of its directors or officers) shall have any Liability or further obligation to any other party.

(b) In the event of any termination of this Agreement on or after the Closing Date, only the provisions of Article IV will terminate and the other provisions of this Agreement and each Ancillary Agreement shall remain in full force and effect.

ARTICLE XIII

MISCELLANEOUS

13.1. Counterparts, Entire Agreement, Corporate Power.

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

(b) This Agreement, and the Exhibits, Schedules and Appendices hereto contain the entire agreement between the parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the parties other than those set forth or referred to herein or therein. If this Agreement conflicts with any provision of any of the Ancillary Agreements, the provisions of the Ancillary Agreements shall govern.

(c) PC Mall represents on behalf of itself and each other member of the PC Mall Group and eCOST represents on behalf of itself and each other member of the eCOST Group as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and

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perform this Agreement and each of the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby; and

(ii) this Agreement and each of the Ancillary Agreements to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

13.2. Governing Law. Except as set forth in Section 10.10, this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California (other than as to its laws of arbitration which shall be governed under the Arbitration Act or other applicable federal law pursuant to Section 10.10), irrespective of the choice of laws principles of the State of California, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

13.3. Assignability. Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the parties hereto and thereto, respectively, and their respective successors and assigns; provided, however, that no party hereto or thereto may assign its respective rights or delegate its respective obligations under this Agreement or any Ancillary Agreement without the express prior written consent of the other parties hereto or thereto.

13.4. Third Party Beneficiaries. Except for the indemnification rights under this Agreement of any PC Mall Indemnitee or eCOST Indemnitee in their respective capacities as such, (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the parties and are not intended to confer upon any Person except the parties any rights or remedies hereunder, and (b) there are no third party beneficiaries of this Agreement or any Ancillary Agreement and none of this Agreement or any Ancillary Agreement shall provide any third person with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement. No party hereto shall have any right, remedy or claim with respect to any provision of this Agreement or any Ancillary Agreement to the extent such provision relates solely to the other two parties hereto or the members of such other two parties’ respective Groups.

13.5. Notices. Except as may be provided in any Ancillary Agreement, all notices, requests, demands, waivers and other communications under this Agreement or any Ancillary Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or by facsimile transmission or mailed (certified or registered mail, postage prepaid, return receipt requested):

If to PC Mall, to:	PC Mall, Inc. 2555 West 190th Street, Suite 201 Torrance, California 90504 Attention: Chief Executive Officer
	Fax No.: (310) 353-7411

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with a copy to:	PC Mall, Inc. 2555 West 190th Street, Suite 201 Torrance, California 90504 Attention: General Counsel Fax No.: (310) 630-3992
If to eCOST:	eCOST.com, Inc. 2555 West 190th Street, Suite 106 Torrance, California 90504 Attention: Chief Executive Officer Fax No.: (310) 630-3578

or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which hand delivered, upon transmission of the facsimile transmission by the sender and issuance by the transmitting machine of a confirmation slip confirming that the number of pages constituting the notice have been transmitted without error, or on the third business day following the date on which so mailed, except for a notice of change of address, which shall be effective only upon receipt thereof. In the case of a notice sent by facsimile transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the address provided for above. However, such mailing shall in no way alter the time at which the facsimile notice is deemed received. In no event shall the provision of notice pursuant to this Section 13.5 constitute notice for service of process.

13.6. Severability. If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby or thereby, as the case may be, is not affected in any manner adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

13.7. Force Majeure. No party shall be deemed in default of this Agreement or any Ancillary Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement or any Ancillary Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused

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delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

13.8. Publicity. Prior to the Distribution, each of eCOST and PC Mall shall consult with each other prior to issuing any press releases or otherwise making public statements with respect to the IPO, the Distribution or any of the other transactions contemplated hereby and prior to making any filings with any Governmental Authority with respect thereto.

13.9. Expenses. eCOST shall pay all third-party costs, fees and expenses relating to the IPO, all of the reimbursable expenses of the Underwriters pursuant to the Underwriting Agreement, all of the costs of producing, printing, mailing and otherwise distributing any prospectus, as well as the Underwriters’ discount provided for in the Underwriting Agreement. Except as expressly set forth in this Agreement or in any Ancillary Agreement, whether or not the Distribution is consummated, each party hereto shall bear its own respective third party fees, costs and expenses paid or incurred in connection with the Distribution.

13.10. Headings. The article, section and paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

13.11. Survival of Covenants. Except as expressly set forth in any Ancillary Agreement, the covenants, representations and warranties contained in this Agreement and each Ancillary Agreement, and liability for the breach of any obligations contained herein, shall survive each of the IPO and the Distribution.

13.12. Waivers of Default. Waiver by any party of any default by the other party of any provision of this Agreement or any Ancillary Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other party.

13.13. Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the party or parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived.

13.14. Amendments.

(a) No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by any party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment, supplement or modification.

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(b) Without limiting the foregoing, the parties anticipate that, prior to the Closing Date, some or all of the Schedules to this Agreement may be amended or supplemented and, in such event, such amended or supplemented Schedules shall be attached hereto in lieu of the original Schedules.

13.15. Interpretation. Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement (or the applicable Ancillary Agreement) as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement (or such Ancillary Agreement). Article, Section, Exhibit, Schedule and Appendix references are to the Articles, Sections, Exhibits, Schedules and Appendices to this Agreement (or the applicable Ancillary Agreement) unless otherwise specified. The word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive.

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IN WITNESS WHEREOF, the parties have caused this Master Separation and Distribution Agreement to be executed by their duly authorized representatives.

PC MALL, INC.
By:	/s/    THEODORE R. SANDERS
Name:	Theodore R. Sanders
Title:	Chief Financial Officer

eCOST.COM, INC.
By:	/s/    ADAM SHAFFER
Name:	Adam Shaffer
Title:	Chief Executive Officer

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Schedule A

(Ancillary Agreements)

Tax Allocation and Indemnification Agreement

Employee Benefit Matters Agreement

Administrative Services Agreement

Product Sales, Inventory Management and Order Fulfillment Agreement

Information Technology Systems Usage and Services Agreement

AF Services Software License Agreement

PC Mall Software License Agreement

Registration Rights Agreement with PC Mall

Registration Rights Agreement with Frank F. Khulusi

Amended and Restated Sublease Agreement

Schedule A

Schedule 4.5

Warrant Adjustments

The exercise prices for each PC Mall Adjusted Warrant and eCOST Warrant will be determined as follows:

1. Calculate the aggregate intrinsic value of the PC Mall Warrant immediately prior to the Distribution and determine the ratio of the exercise price for the PC Mall Warrant to the market value of PC Mall Common Stock immediately prior to the Distribution (the “Pre-Distribution Exercise Price to Market Price Ratio”).

2. Calculate the preliminary PC Mall Adjusted Warrant exercise price by dividing (x) the market value of PC Mall Common Stock (without eCOST) immediately after the Distribution by (y) the sum of (i) the market value of PC Mall Common Stock immediately after the Distribution and (ii) the market value of eCOST Common Stock immediately after the Distribution multiplied by the Distribution Ratio, and multiplying the result by the exercise price for the PC Mall Warrant.

3. Divide the preliminary PC Mall Adjusted Warrant exercise price by the market value of PC Mall Common Stock immediately after the Distribution to determine the “PC Mall Adjusted Exercise Price to Market Price Ratio.” If the PC Mall Adjusted Exercise Price to Market Price Ratio is less than the Pre-Distribution Exercise Price to Market Price Ratio, increase the preliminary PC Mall Adjusted Warrant exercise price to align the PC Mall Adjusted Exercise Price to Market Ratio with the Pre-Distribution Exercise Price to Market Price Ratio in order to determine the final Adjusted PC Mall Warrant exercise price.

4. Calculate the preliminary eCOST Warrant exercise price by multiplying the exercise price for the PC Mall Warrant by the result obtained by dividing (z) one minus the fraction calculated in paragraph 2 above by (w) the Distribution Ratio.

5. Divide the preliminary eCOST Warrant exercise price by the market value of eCOST Common Stock immediately after the Distribution to determine the “eCOST Adjusted Exercise Price to Market Price Ratio.” If the eCOST Adjusted Exercise Price to Market Ratio is less than the Pre-Distribution Exercise Price to Market Price Ratio, increase the preliminary eCOST Warrant exercise price to align the eCOST Adjusted Exercise Price to Market Price Ratio with the Pre-Distribution Exercise Price to Market Price Ratio in order to determine the final eCOST Warrant exercise price.

6. Add the aggregate intrinsic values of the Adjusted PC Mall Warrant and eCOST Warrant and compare the sum to the aggregate intrinsic value calculated in paragraph 1 above and make final adjustments, if necessary, so that the aggregate intrinsic values of the Adjusted PC Mall Warrant and eCOST Warrant do not exceed the original aggregate intrinsic value of the PC Mall Warrant.

Schedule 4.5

EX-10.57

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 each due date of the applicable estimated Tax payment with respect to a taxable period for which a PC Mall Consolidated Return or a PC Mall Combined Return will be filed. The amount of such payments for the first, second, third and fourth installments shall cumulatively equal twenty-five percent (25%), fifty percent (50%), seventy-five percent (75%) and one hundred percent (100%), respectively, of the estimated full-year eCOST Separate Tax Return Amount (including minimum tax and environmental tax).

(d) Combined Return Estimated Payments. eCOST shall pay to PC Mall payments of estimated Tax with respect to any PC Mall Combined Return for a PC Mall Consolidated Return Period for periods prior to the Distribution. PC Mall shall advise eCOST of the due date of any such estimated Tax payment and the applicable percentage of estimated Tax required to be paid. The payment due from eCOST shall equal the relevant percentage of the estimated full-year eCOST Separate tax Return Amount. Settlement for such payment shall be made on or before the due date of the applicable estimated Tax payment. PC Mall may direct or allow such payment to be made after the prescribed date.

SECTION 2.6. ADJUSTMENTS RESULTING IN UNDERPAYMENTS.

In the case of any adjustment pursuant to a Final Determination with respect to any Tax Return, the Filing Party shall pay to the applicable Governmental Authority when due any additional Tax due with respect to such Tax Return required to be paid as a result of such adjustment pursuant to a Final Determination. The Filing Party shall compute the amount attributable to eCOST and its Affiliates in accordance with Article II of this Agreement and eCOST shall pay to PC Mall any amount due PC Mall (or PC Mall shall pay eCOST any amount due eCOST) under Section 2 within thirty (30) days from the later of (i) the date the additional Tax was paid by the Filing Party or (ii) the date of receipt of a written notice and demand from the Filing Party for payment of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Any payments required under this Section 2.6 shall include interest computed pursuant to Section 3.5 of this Agreement based on the number of days from the date the additional Tax was paid by the Filing Party to the date of the payment under this Section 2.6.

SECTION 2.7. SEPARATE TAX RETURNS.

Except for PC Mall Federal Consolidated Federal Returns and PC Mall Combined Returns, each Party shall be responsible for the preparation of any Tax Return it is required to file. The Party required to file such Tax Return shall be liable for any Tax due with respect to such Tax Return, shall be entitled to any Refund of such Tax, and shall indemnify the other Party and its Indemnitees against any liability for such Tax.

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SECTION 2.8. POST-DISTRIBUTION TAX RETURNS.

(a) PC Mall shall prepare and file or cause to be filed any Tax Return required to be filed by any member of the PC Mall Group for any Post-Distribution Period.

(b) eCOST shall file or cause to be filed any Tax Return required to be filed by eCOST for any Post-Distribution Period.

SECTION 2.9. MANNER OF PREPARATION.

(a) All Tax Returns filed on or after the Distribution Date shall be prepared on a basis that is consistent with the Tax Opinion obtained from Morrison & Foerster LLP in connection with the Distribution (in the absence of a controlling change in law or circumstances). In the absence of a controlling change in law or circumstances and unless deviation from past practice would have no adverse effect on the other Party, all Tax Returns filed within three years after the Distribution Date shall be prepared on a basis consistent with the elections, accounting methods, conventions, assumptions and principles of taxation used for the most recent taxable periods for which Tax Returns involving similar Tax Items have been filed; provided, however, that a Party preparing any Tax Return that does not conform to such past practices shall not be liable for any additional Tax liability imposed on the other Party, in whole or in part, as a result of such deviation from past practice if: (i) thirty (30) days prior to the filing of such Tax Return, the Party preparing such Tax Return notifies the other Party if such other Party may be adversely affected; and (ii) the Party preparing such Tax Return establishes that conformity with past practice involves a significant risk of the imposition of a penalty. Subject to the provisions of this Agreement, all decisions relating to the preparation of Tax Returns shall be made in the sole discretion of the Party responsible under this Agreement for its preparation; provided, however, that if the other Party is included in such Tax Return, it shall have the right to review and comment on such Tax Return prior to the filing thereof.

(b) Unless otherwise required by any Governmental Authority, the Parties hereby agree to file all Tax Returns, and to take all other actions, in a manner consistent with the position that the Distribution Date is the last day on which eCOST is included in the PC Mall Consolidated Group. For any period that includes but does not end on the Distribution Date, to the extent permitted by law or administrative practice, the taxable year of eCOST shall be treated as ending on the Distribution Date.

ARTICLE III

PAYMENTS OF TAX

In the event that one Party (the “Owing Party”) is required to make a payment to another Party (the “Owed Party”) pursuant this Agreement, then such payments shall be made according to this Article III.

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SECTION 3.1. IN GENERAL.

All payments shall be made to the Owed Party or to the appropriate Governmental Authority as specified by the Owed Party within the time prescribed for payment in this Agreement, or if no period is prescribed, within twenty (20) days after delivery of written notice of payment owing together with a computation of the amounts due.

SECTION 3.2. TREATMENT OF PAYMENTS.

Unless otherwise required by any Final Determination, the Parties agree that any payments made by one Party to another Party (other than payments of After Tax Amounts pursuant to Section 3.4 of this Agreement and payments of interest pursuant to Section 3.5 of this Agreement) pursuant to this Agreement shall be treated for all Tax and financial accounting purposes, subject to applicable law, as nontaxable payments (dividend distributions or capital contributions, as the case may be) made immediately prior to the Distribution and, accordingly, as not includible in the taxable income of the recipient or as deductible by the payor.

SECTION 3.3. PROMPT PERFORMANCE.

All actions required to be taken by any Party under this Agreement shall be performed within the time prescribed for performance in this Agreement, or if no period is prescribed, such actions shall be performed as soon as practicable.

SECTION 3.4. AFTER TAX AMOUNTS.

If pursuant to a Final Determination it is determined that the receipt or accrual of any payment made under this Agreement (other than payments of interest pursuant to Section 3.5 of this Agreement) is subject to any Tax, the Party making such payment shall be liable for: (1) the After Tax Amount with respect to such payment; and (2) interest at the rate described in Section 3.5 of this Agreement on the amount of such After Tax Amount from the date such After Tax Amount is due under this Agreement through the date of payment of such After Tax Amount. A Party making a demand for a payment pursuant to this Agreement and for a payment of an After Tax Amount with respect to such payment shall separately specify and compute such After Tax Amount. However, a Party may choose not to specify an After Tax Amount in a demand for payment pursuant to this Agreement without thereby being deemed to have waived its right subsequently to demand an After Tax Amount with respect to such payment.

SECTION 3.5. INTEREST.

Payments made pursuant to this Agreement that are not made within the period prescribed in this Agreement (the “Payment Period”) shall bear interest for the period from and including the date immediately following the last date of the Payment Period through and including the date of payment at a per annum rate equal to the applicable rate for large corporate underpayments set forth in Section 6621(c) of the Code. Such interest will be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days for which due.

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ARTICLE IV

INDEMNIFICATION

SECTION 4.1. eCOST INDEMNIFICATION.

eCOST shall indemnify, defend and hold harmless the PC Mall Indemnitees from and against any and all Taxes for which eCOST is liable under this Agreement, and loss, cost, damage, fine, penalty or expense, including reasonable attorneys’ fees and costs, attributable to or resulting from any breach by eCOST of this Agreement or the failure of eCOST to make any payment required to be made under this Agreement.

SECTION 4.2. PC MALL INDEMNIFICATION.

PC Mall shall indemnify, defend and hold harmless the eCOST Indemnitees from and against any and all Taxes for which PC Mall is liable under this Agreement, and loss, cost, damage, fine, penalty or expense, including reasonable attorneys’ fees and costs, attributable to or resulting from any breach by PC Mall of this Agreement or the failure of PC Mall to make any payment required to be made under this Agreement.

SECTION 4.3. PAYMENTS.

All indemnification payments under this Agreement shall be made by PC Mall directly to eCOST and by eCOST directly to PC Mall; provided however, that if the Parties mutually agree with respect to any such indemnification payment, any Affiliate of PC Mall, on one hand, may make such indemnification payment to any Affiliate of eCOST, on the other hand, and vice versa.

ARTICLE V

TAX-FREE STATUS

SECTION 5.1. TAX OPINION AND OFFICER’S CERTIFICATES.

(a) Each of PC Mall and eCOST hereby represents and agrees that (i) it will read the Officer’s Certificates prior to the date submitted and (ii) subject to any qualifications therein, all information contained in such Officer’s Certificates that concerns or relates to such Party or any Affiliate of such Party will be true, correct and complete.

(b) PC Mall and eCOST acknowledge that the Tax Opinion and the Officer’s Certificates have not yet been obtained or submitted and may not be obtained or submitted until after the Offering. PC Mall and eCOST shall use their commercially reasonable efforts and shall cooperate in good faith to finalize the Officer’s Certificates for the Distribution as soon as practicable hereafter and to cause the same to be submitted to Morrison & Foerster LLP and shall take other commercially reasonable actions as may be necessary or desirable to obtain the Tax Opinion in order to confirm the Tax-Free Status.

SECTION 5.2. RESTRICTIONS ON eCOST.

(a) eCOST agrees that it will not take or fail to take, or permit any Affiliate of eCOST to take or fail to take, any action where such action or failure to act would be

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inconsistent with or cause to be untrue any material information, covenant or representation that concerns or relates to eCOST or any Affiliate of eCOST in any Officer’s Certificates or Tax Opinion. eCOST agrees that it will not take or fail to take, or permit any Affiliate of eCOST to take or fail to take, any action which prevents or could reasonably be expected to prevent (i) the Tax-Free Status, or (ii) any transaction contemplated by the Distribution Agreement which is intended by the Parties to be tax-free from so-qualifying, including issuing any eCOST Capital Stock that would prevent that Distribution from qualifying as a tax-free distribution under Section 355 of the Code.

(b) After the consummation of the Offering, eCOST agrees that it shall not take nor permit any Affiliate of eCOST to take, any action that could reasonably be expected to jeopardize PC Mall’s Tax Control of eCOST. Without limiting the foregoing, eCOST agrees that, after the consummation of the Offering and on or prior to the Distribution Date, eCOST shall not issue or grant, and shall not permit any Affiliate of eCOST to issue or grant, directly or indirectly, any eCOST Common Shares or any rights, warrants, options or other securities to purchase or acquire (whether upon conversion, exchange or otherwise) any eCOST Common Shares (whether or not then exercisable, convertible or exchangeable) except for grants of stock options to employees or directors of eCOST that by their terms cannot be exercised until after the earlier of (i) the Distribution Date or (ii) eighteen (18) months following the date on which the Offering is consummated.

(c) eCOST agrees that, from the Distribution Date until the first day after the three-year anniversary of the Distribution Date, it will (i) maintain its status as a company directly engaged in the Active Trade or Business and (ii) not engage in any transaction that would result in it ceasing to be a company directly engaged in the Active Trade or Business.

(d) eCOST agrees that, from the Distribution Date until the first day after the three-year anniversary of the Distribution Date, it will not (i) enter into any Proposed Acquisition Transaction, or, to the extent that eCOST has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur; (ii) merge or consolidate with any other Person or liquidate or partially liquidate; (iii) in a single transaction or series of transactions, sell or transfer (other than sales or transfers of inventory in the ordinary course of business) all or substantially all of the assets that are transferred to eCOST pursuant to the Contribution or sell or transfer sixty percent (60%) or more of the gross assets of the Active Trade or Business or sixty percent (60%) or more of the consolidated gross assets of eCOST and its Affiliates (such percentages to be measured based on fair market value as of the Distribution Date); (iv) redeem or otherwise repurchase (directly or through an Affiliate of eCOST) any stock of eCOST, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 CB 696; or (v) take any action or actions (including any action or actions that would be reasonably likely to be inconsistent with any representation made by eCOST in the Officer’s Certificates or the Tax Opinion, which in the aggregate (and taking into account any other transactions described in this Section 5.2(d)) which would be reasonably likely to have the effect of causing or permitting one or more persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in eCOST or otherwise jeopardizing the Tax-Free Status, unless prior to taking any such action set forth in the foregoing clauses (i) through (v), eCOST obtains, and

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provides to PC Mall, a ruling from the IRS or a written opinion from Tax Counsel which opinion is reasonably acceptable to PC Mall that such transaction, and any transaction or transactions related thereto, will not affect the qualification of the Distribution under Section 355 or Section 368 of the Code and will not cause Section 355(e) of the Code to apply to the transaction.

(e) If eCOST proposes to enter into any Section 5.2(e) Acquisition Transaction, or to the extent eCOST has the right to prohibit any Section 5.2(e) Acquisition Transaction, proposes to permit any Section 5.2(e) Acquisition Transaction to occur, in each case, during the period from the Distribution Date until the first day after the three-year anniversary of the Distribution Date, eCOST shall provide to PC Mall, no later than ten (10) days following the signing of any written agreement with respect to the Section 5.2(e) Acquisition Transaction, with a written description of such transaction (including the type and amount of eCOST Capital Stock to be issued in such transaction) and a certificate of the Board of Directors of eCOST to the effect that the Section 5.2(e) Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 5.2(d) apply (a “Board Certificate”).

SECTION 5.3. RESTRICTIONS ON PC MALL.

PC Mall agrees that it will not take or fail to take, or permit any member of the PC Mall Group to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any material information, covenant or representation in any Officer’s Certificates or Tax Opinion. PC Mall agrees that it will not take or fail to take, or permit any member of the PC Mall Group to take or fail to take, any action which prevents or could reasonably be expected to prevent (i) the Tax-Free Status; or (ii) any other transaction contemplated by the Distribution Agreement which is intended by the Parties to be tax-free from so qualifying; provided however, that this Section 5.3 shall not be construed as obligating PC Mall to consummate the Distribution without the satisfaction or waiver of all conditions set forth in Section 4.3 of the Distribution Agreement nor shall it be construed as preventing PC Mall from terminating the Distribution Agreement pursuant to Section 12.2 thereof.

SECTION 5.4. LIABILITY FOR TAX-RELATED LOSSES.

(a) Notwithstanding anything in this Agreement or the Distribution Agreement to the contrary, subject to Section 5.4(c), eCOST shall be responsible for, and shall indemnify and hold harmless PC Mall and its Affiliates and each of their respective officers, directors and employees from and against one hundred percent (100%) of any Tax-Related Losses that are attributable to or result from any one or more of the following: (i) after the Distribution Date, the acquisition (other than pursuant to the Contribution and the Distribution) of all or a portion of eCOST’s stock and/or its assets by any means whatsoever by any Person, (ii) after the Distribution Date, any negotiations, understandings, agreements or arrangements by eCOST with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of eCOST representing a Fifty-Percent or Greater Interest therein; (iii) after the Distribution Date, any act or failure to act by eCOST or any Affiliate of eCOST described in Section 5.2 (regardless of whether such act or

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failure to act is covered by a ruling or tax opinion described in Section 5.2(d), or a Board Certificate described in Section 5.2(e)); or (iv) any breach by eCOST of its agreement and representation set forth in Section 5.1(a) after the Distribution Date.

(b) Notwithstanding anything in this Agreement or the Distribution Agreement to the contrary, subject to Section 5.4(c), PC Mall shall be responsible for, and shall indemnify and hold harmless eCOST and its Affiliates and each of their respective officers, directors and employees from and against one hundred percent (100%) of any Tax-Related Losses that are attributable to or result from any one or more of the following: (i) the acquisition (other than pursuant to the Contribution and the Distribution) of all or a portion of PC Mall’s stock and/or its assets by any means whatsoever by any Person other than an Affiliate of PC Mall; (ii) any negotiations, understandings, agreements or arrangements by PC Mall with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of PC Mall representing a Fifty-Percent or Greater Interest therein; (iii) any act or failure to act by PC Mall or any Affiliate of PC Mall described in Section 5.3; or (iv) any breach by PC Mall of its agreement and representation set forth in Section 5.1(a).

(c) To the extent that any Tax-Related Loss is subject to indemnity under both Sections 5.4(a) and (b) hereof, responsibility for such Tax-Related Loss shall be shared by PC Mall and eCOST according to relative fault.

ARTICLE VI

TAX ATTRIBUTES

SECTION 6.1. APPORTIONMENT OF TAX ATTRIBUTES.

(a) If the PC Mall Consolidated Group has a Tax Attribute, the portion, if any, of such Tax Attribute that shall be apportioned to eCOST and treated as a carryover to the first Post-Distribution Period of eCOST shall be determined in accordance with Treasury Regulation §§ 1.1502-21(b), 1.1502-22(b), 1.1502-79 and 1.1502-79A; provided, however, that the portion, if any, of any consolidated unused Foreign Tax credit which shall be apportioned to eCOST or such member shall be determined separately with respect to each of the items of income listed in Section 904(d) of the Code.

(b) No consolidated U.S. federal income Tax Attribute of the PC Mall Consolidated Group, other than those described in Section 6.1(a) hereof, and no consolidated, combined or unitary state, local, or foreign income Tax Attribute arising in respect of a PC Mall State, Local and Foreign Return, shall be apportioned to eCOST, except as PC Mall (or such member of the PC Mall Group as PC Mall shall designate) determines is otherwise required under the provisions of applicable law.

(c) PC Mall shall determine the portion, if any, of any Tax Attribute which must (absent a Final Determination to the contrary) be apportioned to eCOST in accordance with this

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Section 6.1 and applicable law, and the amount of tax basis and earnings and profits to be apportioned to eCOST in accordance with applicable law, and shall provide written notice of the calculation thereof to eCOST as soon as practicable after the information necessary to make such calculation becomes available to PC Mall.

(d) eCOST shall prepare, or cause to be prepared, and file, or cause to be filed, all Income Tax Returns for which it is responsible under this Agreement, so as to take into account, to the extent permitted by applicable law, any Tax Attribute (and the amount of tax basis and earnings and profits) apportioned to eCOST as calculated pursuant to Section 6.1(c) hereof. Until such time as any such Tax Attribute has been utilized by eCOST (or would have been so utilized had eCOST complied with the requirements of the previous sentence), eCOST shall, in connection with each Income Tax Return filed by it, provide PC Mall with a statement, signed by eCOST’s chief financial officer and certified by eCOST’s independent accounting firm, setting forth in reasonable detail a calculation of the extent to which any such Tax Attribute was utilized on such Income Tax Return (or would have been so utilized had eCOST complied with the requirements of the previous sentence).

(e) Notwithstanding any other provision of this Agreement, eCOST hereby expressly agrees to elect (under Section 172(b)(3) of the Code and, to the extent feasible, any similar provision of any state, local or Foreign Tax law) to relinquish any right to carry back net operating losses for any tax year with respect to which such net operating loss could otherwise be carried back into a Consolidated Return or a Combined Return (in which event no payment shall be due from PC Mall to eCOST in respect of such net operating loss).

(f) PC Mall shall be entitled to all Refunds (and any interest thereon received from the applicable Governmental Authority) in respect of Income Taxes for all PC Mall Consolidated Return Periods. Except to the extent provided in Section 6.1(e), eCOST shall be entitled to all Refunds (and any interest thereon received from the applicable Governmental Authority) in respect of Income Taxes paid by eCOST for all Post-Distribution Periods. A Party receiving a Refund to which another Party is entitled pursuant to this Section 6.1(f) shall pay the amount to which such other Party is entitled within ten (10) days after such Refund is Actually Realized. PC Mall shall be permitted to file, and eCOST shall fully cooperate with PC Mall in connection with, any claim for Refund in respect of an Income Tax for which any member of the PC Mall Group is responsible pursuant to Section 2 hereof. Any costs and expenses, if any, incurred in connection with obtaining a Refund shall be borne by the Party that is entitled to such Refund under this Section 6.1(f).

ARTICLE VII

COMPENSATORY STOCK OPTIONS

SECTION 7.1. DEDUCTIONS.

(a) All compensation deductions attributable to the amounts included in the gross income of a PC Mall Optionee whether such amounts of gross income are attributable to the exercise of a PC Mall Option or an eCOST Option shall be allocated to and claimed by the PC Mall Group and eCOST shall not report such deductions on its Income Tax Returns.

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(b) All compensation deductions attributable to the amounts included in the gross income of an eCOST Optionee as a result of the exercise of an eCOST Option or a PC Mall Option after the Distribution Date shall be allocated to and claimed by eCOST and the PC Mall Group shall not report such deductions on its Income Tax Returns.

SECTION 7.2. WITHHOLDING AND INFORMATION REPORTING.

(a) PC Mall shall be responsible for any payroll Taxes, withholding Taxes and information reporting arising out of the exercise of a PC Mall Option or an eCOST Option by a PC Mall Optionee, and eCOST shall be responsible for any payroll Taxes, withholding Taxes and information reporting arising out of the exercise of a PC Mall Option or an eCOST Option by an eCOST Optionee.

(b) With respect to any eCOST Option held by a PC Mall Optionee, and with respect to any PC Mall Option held by an eCOST Optionee, (each, a “Crossover Option”) such entity as mutually designated by PC Mall and eCOST shall act as the recordkeeper for the Crossover Options. If the exercise of Crossover Options is made pursuant to a broker-assisted cashless exercise through the recordkeeper in accordance with the regulations of the Federal Reserve Board, then immediately after such exercise, the recordkeeper shall sell the number of shares necessary to remit the following payments (which may be all the shares): (i) to the issuer of the option, the exercise price; and (ii) to the employer of the option holder, the employee’s share of income and payroll taxes. The recordkeeper shall thereafter remit to the option holder (i) the balance of the proceeds from the sale of all shares or (ii) the remaining whole shares and cash for any fractional shares, as applicable.

SECTION 7.3. COOPERATION.

PC Mall and eCOST agree to act (or to take such action) with respect to such Tax deductions, and with respect to fulfilling the payroll Tax, withholding Tax and information reporting obligations, consistent with Sections 7.1 and 7.2 above, as are reasonably necessary or appropriate to achieve, maintain and/or preserve such tax results.

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ARTICLE VIII

TAX AUDITS, TRANSACTIONS AND OTHER MATTERS

SECTION 8.1. TAX AUDITS AND CONTROVERSIES.

(a) In General. Except as otherwise provided in this Agreement, the Party responsible for filing a Tax Return pursuant to Section 2 of this Agreement (the “Filing Party”) shall have the exclusive right, in its sole discretion, to control, contest, and represent the interests of the PC Mall Group and eCOST in any Audit relating to such Tax Return and to resolve, settle or agree to any deficiency, claim or Adjustment proposed, asserted or assessed in connection with or as a result of any such Audit. The Filing Party’s rights shall extend to any matter pertaining to the management and control of an Audit, including execution of waivers, choice of forum, scheduling of conferences and the resolution of any Tax Item. Any costs incurred in handling, settling, or contesting an Audit shall be borne by the Filing Party.

(b) Participation of Non-Filing Party. Except as otherwise provided in this Agreement, the Non-Filing Party shall have the right to assume control over decisions to resolve, settle or otherwise agree to any deficiency, claim or Adjustment with respect to any Sole Responsibility Item for which the Non-Filing Party’s responsibility under this Agreement could exceed ten thousand dollars ($10,000); provided, that the Non-Filing Party acknowledges in writing that it has sole liability, as between the Filing Party and the Non-Filing Party, for such deficiency, claim or Adjustment. The Filing Party shall not settle any Audit they control concerning a Tax Item on a basis that would materially adversely affect the Non-Filing Party without obtaining such Non-Filing Party’s consent, which consent shall not be unreasonably withheld if failure to consent would adversely affect the Filing Party.

(c) Notice. Within ten (10) days after a Party receives a written notice from a Governmental Authority of a proposed Adjustment to a Tax Item (irrespective of whether such proposed Adjustment would reasonably be expected to give rise to an indemnification obligation or other liability (including a liability for Tax) under this Agreement), such Party shall notify the other Party of such proposed Adjustment, and thereafter shall promptly forward to the other Party copies of notices and communications with any Governmental Authority relating to such proposed Adjustment; provided, however, that the failure to provide such notice shall not release the indemnifying Party from any of its obligations under this Agreement except to the extent that such indemnifying Party is materially prejudiced by such failure.

SECTION 8.2. ASSISTANCE AND COOPERATION; RELIANCE.

(a) After the Offering, the Parties shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Parties and their Affiliates including: (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes; (iii) examinations of Tax Returns; and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to the other Party and its Affiliates reasonably available to such other Party as provided in Section 8.3. Each of the Parties shall also

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make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Parties or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes.

(b) Any information or documents provided under this Section 8.2 shall be kept confidential by the Party receiving the information or documents as provided in Section 8.5, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. Notwithstanding any other provision of this Agreement or any other agreement to the contrary, (i) neither PC Mall nor any Affiliate of PC Mall shall be required to provide eCOST, any Affiliate of eCOST or any other Person access to or copies of any information or procedures other than information or procedures that relate solely to eCOST, an Affiliate of eCOST or the business or assets of eCOST or any Affiliate of eCOST and (ii) in no event shall PC Mall or any Affiliate of PC Mall be required to provide eCOST, any Affiliate of eCOST or any other Person access to or copies of any information if such action could reasonably be expected to result in the waiver of any privilege. In addition, in the event that PC Mall determines that the provision of any information to eCOST or any Affiliate of eCOST could be commercially detrimental, violate any law or agreement or waive any privilege, the Parties shall use commercially reasonable efforts to permit compliance with its obligations under this Section 8.2 in a manner that avoids any such harm or consequence.

(c) eCOST and PC Mall acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by PC Mall or eCOST pursuant to Section 8.2(a) or (b), or this Section 8.2(c). eCOST and PC Mall acknowledge that failure to conform to the deadlines set forth herein or reasonable deadlines otherwise set by PC Mall or eCOST could cause irreparable harm.

(d) Each Party shall provide to the other Party information and documents relating to its respective Affiliates required by the other Party to prepare Tax Returns. Any information or documents the Filing Party requires to prepare such Tax Returns shall be provided in such time and form as is reasonably required and necessary for the Filing Party to file such Tax Returns on a timely basis.

(e) In the event that eCOST fails to provide any information requested by PC Mall pursuant to this Section 8.2, within the deadlines as set forth herein (or otherwise reasonably set by PC Mall and agreed to by eCOST, such agreement not to be unreasonably withheld), PC Mall shall have the right to engage a nationally recognized public accounting firm of its choice (the “Accountant”), in its sole and absolute discretion, to gather such information directly from eCOST or any Affiliate of eCOST. eCOST and its Affiliates agree, upon ten business days’ notice by PC Mall, in the case of a failure by eCOST to provide information pursuant to this Section 8.2, to permit any such Accountant full access to all records or other information requested by such Accountant that are in the possession of eCOST or any Affiliate of eCOST during reasonable business hours. eCOST agrees to promptly pay PC Mall all reasonable costs and expenses incurred by PC Mall in connection with the engagement of such Accountant.

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(f) If eCOST or any of its Affiliates supplies information to PC Mall or any of its Affiliates in connection with a Tax liability and an officer of PC Mall or any of its Affiliates signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of PC Mall or such Affiliate of PC Mall identifying the information being so relied upon, the chief financial officer of eCOST (or any officer of eCOST as designated by the chief financial officer of eCOST) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. eCOST agrees to indemnify and hold harmless PC Mall, its Affiliates, and their directors, officers and employees from and against any fine, penalty, or other cost or expense of any kind attributable to eCOST or any of its Affiliates having supplied, pursuant to this Section 8, PC Mall or any of its Affiliates with inaccurate or incomplete information in connection with a Tax liability.

(g) If PC Mall or any of its Affiliates supplies information to eCOST or any of its Affiliates in connection with a Tax liability and an officer of eCOST or any of its Affiliates signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of eCOST or such Affiliate of eCOST identifying the information being so relied upon, the chief financial officer of PC Mall (or any officer of PC Mall as designated by the chief financial officer of PC Mall) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. PC Mall agrees to indemnify and hold harmless eCOST, its Affiliates, and their directors, officers and employees from and against any fine, penalty, or other cost or expense of any kind attributable to PC Mall or any of its Affiliates having supplied, pursuant to this Section 8, eCOST or any of its Affiliates with inaccurate or incomplete information in connection with a Tax liability.

SECTION 8.3. RETENTION OF RECORDS; ACCESS.

Beginning on the Distribution Date, PC Mall and eCOST shall, and shall cause each of their Affiliates to:

(a) retain adequate records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns required to be filed by PC Mall and its Affiliates and for any Audits and litigation relating to such Tax Returns or to any Taxes payable by PC Mall or its Affiliates; and

(b) give to the other Party reasonable access to such records, documents, accounting data and other information (including computer data) and to its personnel and premises for the purpose of the review or Audit of such reports or returns to the extent relevant to an obligation or liability of a Party under this Agreement and in accordance with the provisions of Article IX of the Distribution Agreement.

(c) The obligations set forth in Sections 8.3(a) and 8.3(b) hereof shall continue until the final conclusion of any Audit or litigation to which the records and information relate or until expiration of all applicable statutes of limitations, whichever is longer.

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SECTION 8.4. DISPUTE RESOLUTION.

Any dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement, shall be resolved in the manner set forth in Article X of the Distribution Agreement.

SECTION 8.5. CONFIDENTIALITY; OWNERSHIP OF INFORMATION; PRIVILEGED INFORMATION.

The provisions of Article IX of the Distribution Agreement relating to confidentiality of information, ownership of information, privileged information and related matters shall apply with equal force to any records and information prepared and/or shared by and between the Parties in carrying out the intent of this Agreement.

ARTICLE IX

MISCELLANEOUS

SECTION 9.1. COMPLETE AGREEMENT; CONSTRUCTION.

This Agreement, the Distribution Agreement, including the exhibits and schedules, shall constitute the entire agreement between the Parties with respect to the subject matter hereof and thereof, and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. In the event of any inconsistency between this Agreement and any Schedule hereto, the Schedule shall prevail.

SECTION 9.2. COUNTERPARTS.

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Party.

SECTION 9.3. SURVIVAL OF AGREEMENTS.

Except as otherwise provided by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date.

SECTION 9.4. EXPENSES.

Except as otherwise set forth in this Agreement, all costs and expenses in connection with the preparation, execution, delivery and required implementation of this Agreement shall be charged to and paid by the Parties in accordance with Section 13.9 of the Distribution Agreement.

SECTION 9.5. NOTICES.

All notices and other communications hereunder shall be in writing and hand delivered or mailed by registered or certified mail (return receipt requested) or sent by any means of

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electronic message transmission with delivery confirmed (by voice or otherwise) to the Parties at the following addresses (or at such other addresses for a Party as shall be specified by like notice) and will be deemed given on the date on which such notice is received:

(i) if to PC Mall, to:

PC Mall, Inc.

2555 West 190^th Street, Suite 201

Torrance, CA 90504

Telecopy: (310) 353-7435

Attn: Chief Financial Officer

With a copy to:

PC Mall, Inc.

2555 West 190^th Street, Suite 201

Torrance, CA 90504

Telecopy: (310) 630-3992

Attn: General Counsel

(ii) if to eCOST, to:

eCOST.com, Inc.

2555 West 190^th Street, Suite 106

Torrance, CA 90504

Telecopy: (310) 630-3578

Attn: Chief Executive Officer

SECTION 9.6. WAIVERS.

The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

SECTION 9.7. AMENDMENTS.

Subject to the terms of Section 9.9 hereof, this Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties hereto.

SECTION 9.8. ASSIGNMENT.

This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party hereto without the prior written consent of the other Party hereto, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void.

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SECTION 9.9. SUCCESSORS AND ASSIGNS.

The provisions to this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

SECTION 9.10. TERMINATION.

This Agreement may be terminated at any time prior to the Effective Date by and in the sole discretion of PC Mall as provided in Section 12.2 of the Distribution Agreement. In the event of such termination, neither Party shall have any liability of any kind to the Party or any other person. After the Distribution, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties hereto.

SECTION 9.11. AFFILIATES.

Each of the Parties hereto shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Affiliates of such Party or by any entity that is contemplated to be an Affiliate of such Party on and after the Distribution Date. For the sake of clarity, eCOST and any of its Affiliates shall not be deemed to be an Affiliate of PC Mall under this Section 9.11.

SECTION 9.12. THIRD PARTY BENEFICIARIES.

This Agreement is solely for the benefit of the Parties hereto and their respective Affiliates and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

SECTION 9.13. TITLE AND HEADINGS.

Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

SECTION 9.14. EXHIBITS AND SCHEDULES.

The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

SECTION 9.15. GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

SECTION 9.16. CONSENT TO JURISDICTION.

Without limiting the provisions of Section 8.4 hereof, each of the parties irrevocably submits to the exclusive jurisdiction of (a) the Superior Court of the State of California, Los

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Angeles County, and (b) the United States District Court for the Central District of California, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of the parties agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Central District of California or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Superior Court of the State of California, Los Angeles County. Each of the parties further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in California with respect to any matters to which it has submitted to jurisdiction in this Section 9.16. Each of the parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) Superior Court of the State of California, Los Angeles County, or (ii) the United States District Court for the Central District of California, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 9.17. SEVERABILITY.

In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.

PC MALL, INC., a Delaware Corporation
By:	/s/    THEODORE R. SANDERS
Name:	Theodore R. Sanders
Title:	Chief Financial Officer
eCOST.COM, INC., a Delaware Corporation
By:	/s/    ADAM SHAFFER
Name:	Adam Shaffer
Title:	Chief Executive Officer

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EX-10.58

EXHIBIT 10.58

EMPLOYEE BENEFIT MATTERS AGREEMENT

THIS EMPLOYEE BENEFIT MATTERS AGREEMENT (this “Agreement”) is entered into on September 1, 2004, by and between PC Mall, Inc., a Delaware corporation (“PC Mall”), and eCost.com, Inc., a Delaware corporation (“eCost”).

RECITALS

WHEREAS, eCost is currently a wholly-owned subsidiary of PC Mall;

WHEREAS, eCost is considering an initial public offering of its Common Stock (“IPO”); and

WHEREAS, in furtherance of the foregoing, PC Mall and eCost desire to enter into this Agreement to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, benefit plans and programs, and certain employment matters.

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

The following terms, as used herein, shall have the following meanings:

“Adjusted Option” shall have the meaning set forth in Section 5.1(a) of this Agreement.

“Administrative Services Agreement” shall have the meaning set forth in Article I of the Master Separation and Distribution Agreement.

“Affiliate” shall mean, when used with respect to a Person, another Person that controls, is controlled by, or is under common control (within the meaning of Section 414(b), (c), (m) or (o) of the Code) with the Person specified.

“Ancillary Agreements” shall have the meaning set forth in Article I of the Master Separation and Distribution Agreement.

“Board of Directors” shall mean, when used with respect to a specified corporation, the board of directors of the corporation so specified.

“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the regulations promulgated thereunder, including any successor legislation.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, including any successor legislation.

“Distribution Date” shall mean the date on which PC Mall’s interest in eCost shall be distributed, as further defined in the Master Separation and Distribution Agreement.

“Distribution Ratio” shall have the meaning set forth in Section 5.1(a) of this Agreement.

“eCost” shall have the meaning set forth in the recitals hereto.

“eCost Adjusted Exercise Price to Market Price Ratio” shall have the meaning set forth on Schedule 5.1(b) of this Agreement.

“eCost Employees” shall mean persons who are employed by eCost (including persons who would otherwise be deemed to be eCost Employees who are absent from work by reason of disability or leave of absence and inactive employees treated as such by agreement therewith).

“eCost Employment Liabilities” shall have the meaning set forth in Section 7.1(c) of this Agreement.

“eCost Flex Plan” shall have the meaning set forth in Section 4.2 of this Agreement.

“eCost Option” shall have the meaning set forth in Section 5.1(a) of this Agreement.

“eCost Option Plans” shall mean that certain eCost 1999 Stock Incentive Plan and that certain eCost 2004 Stock Incentive Plan.

“eCost Savings Plan” shall have the meaning set forth in Section 3.2(a) of this Agreement.

“eCost Welfare Plan” shall have the meaning set forth in Section 4.1 of this Agreement.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder, including any successor legislation.

“Group Status Change” shall mean the cessation of PC Mall’s ownership of at least eighty percent (80%) of the combined voting power of all classes of stock entitled to vote or the total value of all shares of all classes of stock of eCost then outstanding. PC Mall’s ownership of outstanding eCost stock shall be determined pursuant to Sections 414 and 1563 of the Code.

“Group Status Change Date” shall mean the earlier of (i) the Distribution Date or (ii) the date on which the Group Status Change occurs, or such other date as PC Mall and eCost shall mutually agree upon.

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“Master Separation and Distribution Agreement” shall mean that certain Master Separation and Distribution Agreement, by and between PC Mall and eCost, of even date herewith.

“Offering Date” shall mean the date on which the IPO closes.

“PC Mall” shall have the meaning set forth in the recitals hereto.

“PC Mall Adjusted Exercise Price to Market Price Ratio” shall have the meaning set forth on Schedule 5.1(b) of this Agreement.

“PC Mall Adjusted Option” shall have the meaning set forth in Section 5.1(a) of this Agreement.

“PC Mall Employees” shall mean persons who, immediately prior to the Group Status Change Date are employed by the PC Mall Group (including persons who would otherwise be deemed to be PC Mall Employees who are absent from work by reason of disability or leave of absence and inactive employees treated as such by agreement therewith).

“PC Mall Group” shall mean PC Mall, together with all its wholly-owned subsidiaries, excluding eCost.

“PC Mall Option Number” shall have the meaning set forth in Section 5.1(a) of this Agreement.

“PC Mall Retained Employees” shall mean persons who, immediately after the Group Status Change Date, are employed by the PC Mall Group (including persons who would otherwise be deemed to be PC Mall Retained Employees who are absent from work by reason of disability or leave of absence and inactive employees treated as such by agreement therewith) but shall not include any persons who are or become eCost Employees on or after such date.

“PC Mall Welfare Plan” shall mean the “PC Mall, Inc. Welfare Benefits Plan” as in effect from time to time.

“PC Mall Savings Plan” shall mean the “Creative Computers, Inc. 401(k) Plan,” as in effect from time to time.

“PC Mall Stock Option” shall mean any option to purchase PC Mall common stock.

“PC Mall Stock Option Plans” shall mean that certain PC Mall Amended and Restated 1994 Stock Incentive Plan, as amended, and that certain PC Mall Amended and Restated Directors’ Non-Qualified Stock Option Plan.

“Person” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other

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entity, and any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

“Plan(s)” shall mean any “employee benefit plans” (within the meaning of Section 3(3) of ERISA), retirement, pension, savings, profit-sharing, welfare, stock purchase, stock option, equity-based, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation, disability, worker’s compensation and all other employee benefit plans, agreements, programs, policies or other arrangements (including any funding mechanisms therefor), whether or not subject to ERISA, whether formal or informal, oral or written, legally binding or not.

“Plan Transfer Date” shall have the meaning set forth in Section 3.2(b) of this Agreement.

“Pre-Distribution Exercise Price to Market Price Ratio” shall have the meaning set forth on Schedule 5.1(b) of this Agreement.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Tax Allocation and Indemnification Agreement” shall mean that certain Tax Allocation and Indemnification Agreement, by and between PC Mall and eCost, of even date herewith.

“Welfare Benefit Plan” shall mean, any Plan providing welfare benefits within the meaning of Section 3(1) of ERISA.

Except as otherwise expressly provided herein, all capitalized terms used and not defined herein shall have the respective meanings assigned to them in the Master Separation and Distribution Agreement.

ARTICLE II

PRE-STATUS CHANGE PLAN PARTICIPATION

2.1 Continuing Participation in PC Mall Plans. Except as specified otherwise in this Agreement, or as PC Mall may otherwise direct, eCost shall continue as a “participating company” in the PC Mall Plans in effect as of the Offering Date, to the extent that eCost has not yet established comparable Plans of its own.

2.2 PC Mall’s General Obligations as Plan Sponsor. The PC Mall Group shall continue to administer, or cause to be administered, in accordance with their terms and applicable law, such PC Mall Plans, and shall have the sole and absolute discretion and authority to modify and interpret such Plans, as set forth therein.

2.3 eCost’s General Obligations as Participating Company. eCost shall perform with respect to its participation in the PC Mall Plans, the duties of a participating company as set forth in each such Plan or any procedures adopted

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pursuant thereto, including (without limitation): (i) assisting in the administration of claims, to the extent requested by the claims administrator of the applicable Plan; (ii) prompt payment of its allocable share expenses and costs relating to its participation; (iii) cooperating fully with Plan auditors, benefit personnel and benefit vendors; (iv) preserving the confidentiality of all financial arrangements the PC Mall Group has or may have with any vendors, claims administrators, trustees or any other entity or individual with whom the PC Mall Group has entered into an agreement relating to such Plans; and (v) preserving the confidentiality of participant information to the extent not specified otherwise in this Agreement.

2.4 Termination of Participating Company Status. Except as otherwise may be specified by PC Mall, effective as of the Group Status Change Date or such other date as eCost establishes a comparable Plan (as specified in Section 3.2 or otherwise in this Agreement), eCost shall automatically cease to be a Participating Company in the corresponding PC Mall Plan.

2.5 Terms of Participation for eCost Plans.

(a) Non-Duplication of Benefits. As of the Group Status Change Date or such later date that applies to the particular eCost Plan established thereafter, the eCost Plans shall be, with respect to eCost Employees, in all respects the successors in interest to, and shall not provide benefits that duplicate benefits provided by, the corresponding PC Mall Plans. PC Mall and eCost shall mutually agree, if necessary, on methods and procedures, including amending the respective Plan documents, to prevent eCost Employees from receiving duplicate benefits from the PC Mall Plans and the eCost Plans.

(b) Service Credit. Except as specified otherwise in this Agreement, with respect to eCost Employees, each eCost Plan shall provide that all service, all compensation and all other benefit-affecting determinations that, as of the Group Status Change Date, were recognized under the corresponding PC Mall Plan shall, as of the Group Status Change Date, receive full recognition and credit and be taken into account under such eCost Plan to the same extent as if such items occurred under such eCost Plan, except to the extent that duplication of benefits would result. The service crediting provisions shall be subject to any respectively applicable “break in service,” “employment date,” or “eligibility date” rules under the eCost Plans and the PC Mall Plans.

2.6 Right to Amend or Terminate. Except as specifically provided herein, nothing in this Agreement shall be construed or interpreted to restrict PC Mall’s right or authority to amend or terminate the PC Mall Plans at any time it deems necessary or appropriate.

2.7 Access to Information. The PC Mall Group and eCost shall share, or cause to be shared, all participant information that is necessary or appropriate for the efficient and accurate administration of each of the PC Mall Plans and eCost Plans during the respective periods applicable to such Plans as PC Mall and eCost may mutually agree. The PC Mall Group, eCost and their respective authorized agents shall,

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subject to applicable laws of confidentiality and data protection, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the other party or its agents, to the extent necessary or appropriate for such administration.

ARTICLE III

SAVINGS PLANS

3.1 PC Mall Savings Plan. From and after the Group Status Change Date, PC Mall shall continue to sponsor the PC Mall Savings Plan for the benefit of PC Mall Retained Employees who, prior to such date, were participants thereunder. Active participation of all eCost Employees in the PC Mall Savings Plan shall cease immediately prior to the Group Status Change Date, and the trustee of such plan shall not accept or permit further contributions made by or on behalf of the eCost Employees, other than contributions that accrued prior to the Group Status Change Date. Except as may be required by Section 411(d)(3) of the Code or other applicable law, nothing contained in this Article 3 shall have the effect of accelerating the degree to which any individual has a vested interest in the PC Mall Savings Plan or the eCost Savings Plan.

3.2 eCost Savings Plan.

(a) Effective as of the Group Status Change Date, eCost shall adopt a defined contribution plan that is intended to qualify under Sections 401(a) and 40l(k) of the Code (the “eCost Savings Plan”), under which retirement benefits shall generally be provided for eCost Employees. Subject to such adoption, eCost agrees to use its reasonable best efforts to cause the applicable fiduciaries of the eCost Savings Plan to accept a transfer of assets and liabilities from the PC Mall Savings Plan, in accordance with the spin-off provisions set forth under Section 414(l) of the Code and other applicable law, representing the full account balances of eCost Employees for all periods of participation in the PC Mall Savings Plan through the Group Status Change Date (including all contributions and all earnings attributable thereto).

(b) Prior to the date on which the transfer of assets and liabilities to the eCost Savings Plan may occur (the “Plan Transfer Date”), which date shall occur as promptly as practicable following the Group Status Change Date and be subject to the fiduciaries of the eCost Savings Plan accepting a transfer of assets and liabilities under Section 3.2(a), PC Mall shall (i) cause the trustee of the PC Mall Savings Plan to segregate, in accordance with the spin-off provisions set forth under Section 414(l) of the Code and other applicable law, the assets of the PC Mall Savings Plan representing the full account balances of eCost Employees for all periods of participation in the PC Mall Savings Plan through the Group Status Change Date (including all contributions and all earnings attributable thereto); (ii) make all required filings and submissions to the appropriate governmental agencies; and (iii) make all required amendments to the PC Mall Savings Plan and related trust agreement necessary to provide for the segregation of assets described in this Section 3.2(b).

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(c) On the Plan Transfer Date, PC Mall shall cause the trustee of the PC Mall Savings Plan to transfer to the trustee of the eCost Savings Plan the account balances (inclusive of outstanding participant loans) of any participating eCost Employees, as determined under Section 3.2(b). Such transfer shall be “in kind,” based on those investment funds in which such account balances are then invested or in such other form as PC Mall and eCost may mutually agree; provided, however, that any participant loans to eCost Employees shall be transferred in the form of notes. In consideration of the segregation and transfer of assets described herein, the eCost Savings Plan shall, as of the Plan Transfer Date, assume all liabilities attributable to such assets. Upon the full completion of the transfer described herein, the PC Mall Group and the PC Mall Savings Plan shall be relieved of, and eCost and the eCost Savings Plan shall assume, all liabilities for the payment of any account balances transferred from the PC Mall Savings Plan to the eCost Savings Plan.

3.3 Outstanding Participant Loans. Subject to the fiduciaries of the eCost Savings Plan accepting a transfer of assets and liabilities under Section 3.2(c), with respect to any eCost Employees who have outstanding plan loans originally made from the eCost Savings Plan, such Employees shall be permitted to repay such loans to the eCost Savings Plan by way of regular deductions from their paychecks, and, prior to the Plan Transfer Date, the PC Mall Group or eCost (as the case may be) shall cause all such deductions to be forwarded to the PC Mall Savings Plan as promptly as practicable. From and after the Plan Transfer Date, all plan loan repayments made by eCost Employees shall be remitted exclusively to the eCost Savings Plan but only to the extent such plan loans are transferred to the eCost Savings Plan. Unless expressly contemplated by this Agreement, in no event will the transactions contemplated by this Agreement alter the terms of the applicable notes or the loan provisions of the eCost Savings Plan or the PC Mall Savings Plan.

3.4 Allocation of Liabilities. From and after the Group Status Change Date, the eCost Savings Plan shall assume all liabilities relating to the payment of benefits to eCost Employees in the PC Mall Savings Plan. The PC Mall Group shall retain all other liabilities relating to the PC Mall Savings Plan.

ARTICLE IV

WELFARE PLANS

4.1 Transition for Welfare Plan Participation. From and after the Group Status Change Date, the PC Mall Group shall continue to maintain the PC Mall Welfare Plan for the PC Mall Retained Employees who, prior to such date, were receiving benefits under such plan. Active participation of all eCost Employees in the PC Mall Welfare Plan shall cease as of 11:59 p.m. Pacific Time on the earlier of: (a) the day immediately preceding the Group Status Change Date; or (b) the 90th day following PC Mall’s notification to eCost that the eCost Employees will no longer be eligible to participate in the PC Mall Welfare Plan. From and after such time, eCost shall adopt and maintain the eCost Welfare Plan for the benefit of eCost Employees.

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Notwithstanding the foregoing, neither PC Mall nor eCost shall have any obligation to sponsor any specific Welfare Plan prior to or after the Group Status Change Date.

4.2 Adoption of eCost Flex Plan. Effective as of the Group Status Change Date, eCost shall adopt a “flexible benefit plan” under Section 125 of the Code for the benefit of the eCost Employees (the “eCost Flex Plan”), the material terms of which plan shall be substantially similar to those set forth in the “flexible benefits” component of the PC Mall Welfare Plan. As provided in Section 4.1 above, active participation of all eCost Employees in the flexible benefits component of the PC Mall Welfare Plan shall cease immediately prior to the Group Status Change Date, and such plan shall not accept further contributions made by or on behalf of the eCost Employees, other than contributions that accrued prior to the Group Status Change Date. With respect to amounts deferred into the PC Mall Welfare Plan by eCost Employees prior to the Group Status Change Date, such amounts shall remain available for reimbursement of qualified medical and dependent care expenses incurred prior to the Group Status Change for a period of time to be mutually agreed upon by PC Mall and eCost (the “Run-out Period”). Any claims relating to expenses incurred prior to the Group Status Change Date that are not submitted to administrator for the PC Mall Welfare Plan prior to the end of the Run-out Period shall not be eligible for reimbursement. Any amounts deferred by eCost Employees under the PC Mall Welfare Plan that are not paid out in connection with claims submitted prior to the end of the Run-out Period shall be forfeited. Reimbursement for medical and dependent care expenses incurred after the Group Status Change Date shall be subject to the terms of the eCost Code Flex Plan.

4.3 Continuance of Elections, Co-Payments and Maximum Benefits.

(a) As of the Group Status Change Date, eCost shall cause the eCost Welfare Plans to maintain comparable coverage and contribution elections made by eCost Employees under the PC Welfare Plan and apply such elections under the eCost Welfare Plans for the remainder of the period or periods for which such elections are by their terms applicable. The transfer or other movement of employment between the PC Mall Group and eCost at any time upon or before the Group Status Change Date shall constitute neither a “change in status event” under the PC Mall Welfare Plan or the eCost Welfare Plans nor a “qualifying event,” as defined under COBRA.

(b) On and after the Group Status Change Date, eCost shall cause the eCost Welfare Plans to recognize and give credit for (i) all amounts applied to deductibles, out-of-pocket maximums, co-payments and other applicable benefit coverage limits with respect to which such expenses have been incurred by eCost Employees under the PC Mall Welfare Plan for the remainder of the calendar year in which the Group Status Change Date occurs, and (ii) all benefits paid to eCost Employees under the PC Mall Welfare Plan for purposes of determining when such persons have reached their lifetime maximum benefits under the eCost Welfare Plan. Notwithstanding the above, eCost’s obligations under this SubSection 4.3(b) shall be limited by the market availability of health insurance products or other arrangements satisfying the criteria described above. eCost shall use its commercially reasonable best

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efforts to locate and engage the services of a vendor whose policies or other arrangements meet the requirements above.

4.4 Allocation of Liabilities.

(a) Except to the extent welfare benefits are funded by employee contributions or as otherwise provided in this Agreement, the PC Mall Group shall retain responsibility for and continue to pay all premiums, expenses and benefits relating to the PC Mall Welfare Plan with respect to claims incurred or premiums due prior to the Group Status Change Date by PC Mall Employees (including eCost Employees participating in the PC Mall Welfare Plan prior to such date) as well as their covered dependents.

(b) Except to the extent welfare benefits are funded by employee contributions or as otherwise provided in this Agreement, eCost shall assume responsibility for and pay all premiums, expenses and benefits relating to the eCost Welfare Plan with respect to claims incurred or premiums due from and after the Group Status Change Date by eCost Employees as well as their covered dependents.

(c) For the purposes of this Section 4.4, a claim is deemed incurred when the services that are the subject of the claim are performed; in the case of life insurance, when the death occurs; in the case of long-term disability, when the disability occurs; and, in the case of a hospital stay, when the employee first enters the hospital.

(d) The eCost Welfare Plan shall be responsible for making COBRA continuation coverage available with respect to the eCost Employees (and their covered dependents) subsequent to the Group Status Change Date.

ARTICLE V

EQUITY COMPENSATION

5.1 PC Mall Stock Options. PC Mall Stock Options shall be treated as follows:

(a) As of the Distribution Date, each PC Mall Stock Option outstanding as of the Distribution Record Date and not exercised prior to the Distribution Date shall be adjusted as set forth in this Section 5.1. Each PC Mall Stock Option shall be converted (an “Adjusted Option”), as of the Distribution Date, into two options: an option (the “PC Mall Adjusted Option”) to purchase the same number of shares of PC Mall Common Stock covered by the PC Mall Stock Option and as to which the PC Mall Stock Option has not been exercised as of the Distribution Date (“PC Mall Option Number”) and an option (the “eCost Option”) to purchase a number of shares of eCost Common Stock equal to the PC Mall Stock Option Number times a fraction, the numerator of which is the total number of shares of eCost Common Stock distributed to PC Mall stockholders in the Distribution and the denominator of which is the total number of shares of PC Mall Common Stock outstanding on Distribution Record Date (the “Distribution Ratio”). The terms of the PC Mall Adjusted Option and the eCost

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Option (other than the exercise price and the number of shares) shall be substantially the same as the PC Mall Stock Option.

(b) The exercise prices per share for each PC Mall Adjusted Option and the eCost Option shall be established, as set forth in Schedule 5.1(b) hereto, in a manner so that: (i) the aggregate “intrinsic value” (i.e. the market value of the stock underlying the option, less the exercise price of such option, multiplied by the number of shares then covered by such option) after the Distribution of the PC Mall Adjusted Option plus the eCost Option is not greater than the intrinsic value of the related PC Mall Stock Option immediately prior to the Distribution, and (ii) the ratio of the exercise price per option to the market value per share after the Distribution is not lower than the ratio of the exercise price of the PC Mall Stock Option to the market value per share of PC Mall Common Stock immediately prior to the Distribution. The determination of the exercise prices for each PC Mall Adjusted Option and eCost Option shall be made by PC Mall as advised by its professional advisors.

(c) The eCost Options to be granted with respect to each Adjusted Option shall be issued under the eCost 2004 Stock Incentive Plan, and eCost shall take all corporate action and make all required filings under applicable state blue sky laws and the Securities Act to (i) issue the eCost Options required under this Section 5.1 and (ii) to register or qualify the eCost Options and/or the underlying shares of eCost Common Stock so that the shares of eCost Common Stock acquired upon exercise of each eCost Option are freely tradable under the Securities Act (except for shares acquired by Affiliates of eCost) and each applicable state’s blue sky laws.

(d) The Board of Directors of PC Mall may determine that certain PC Mall Stock Options described above may not be adjusted as described above, but instead shall be subject to such conditions as the Board of Directors of PC Mall (or the compensation committee thereof) shall determine to the extent necessary to avoid adverse tax consequences to option holders who are not U.S. residents.

(e) PC Mall and eCost acknowledge that the adjustment to PC Mall Stock Options under this Article V will be implemented in part by the issuance of the eCost Options under the terms of the eCost 2004 Stock Incentive Plan.

(f) After the Distribution Date, (i) PC Mall Stock Options, regardless of by whom held, shall be settled by PC Mall pursuant to the terms of the applicable PC Mall Stock Option Plans, and (ii) eCost Options, regardless of by whom held, shall be settled by eCost pursuant to the terms of the eCost 2004 Stock Incentive Plan.

5.2 Allocation of Liabilities. Except as provided in Article VII of the Tax Allocation and Indemnification Agreement, (a) eCost shall assume all liabilities with respect to awards granted pursuant to the eCost Option Plans, and (b) the PC Mall Group shall retain all other liabilities with respect to awards granted pursuant to the PC Mall Stock Option Plans (including, but not limited to, awards granted to PC Mall Retained Employees).

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ARTICLE VI

EMPLOYEE TRANSITION

Unless PC Mall and eCost otherwise mutually agree in writing, for the period beginning on the Offering Date and ending on the second anniversary thereof, neither eCost nor the PC Mall Group will, nor will they permit their applicable Affiliates to, solicit or hire any employee of the other or of the other’s Affiliates or any person who, within the six (6) months immediately preceding such solicitation or hiring, was employed by the other or the other’s Affiliates.

ARTICLE VII

INDEMNIFICATION

Article V of the Master Separation and Distribution Agreement shall govern the rights of PC Mall and eCost with respect to indemnification. The term “PC Mall Liabilities” in that Article shall be read to include all liabilities assumed or retained by the PC Mall Group pursuant to this Agreement. The term “eCost Liabilities” in that Article shall be read to include all liabilities assumed or retained by eCost pursuant to this Agreement.

ARTICLE VIII

DISPUTE RESOLUTION

Article IX of the Master Separation and Distribution Agreement shall govern the rights of the PC Mall Group and eCost with respect to dispute resolution.

ARTICLE IX

MISCELLANEOUS

9.1 Counterparts, Entire Agreement, Corporate Power. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. This Agreement and the Schedules hereto contain the entire agreement between the parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the parties other than those set forth or referred to herein or therein.

9.2 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California (other than as to its laws of arbitration which shall be governed under the United States Arbitration Act, 9 U.S.C. §§ 1-14, as the same may be amended from time to time, or other applicable

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federal law pursuant to Article IX of the Master Separation and Distribution Agreement), irrespective of the choice of laws principles of the State of California, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.

9.3 Assignability. This Agreement shall be binding upon and inure to the benefit of the parties hereto and thereto, respectively, and their respective successors and assigns; provided, however, that no party hereto or thereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other parties hereto or thereto.

9.4 Third Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the parties and are not intended to confer upon any Person except the parties any rights or remedies hereunder. There are no third party beneficiaries of this Agreement, and this Agreement shall not provide any third person with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. No party hereto shall have any right, remedy or claim with respect to any provision of this Agreement to the extent such provision relates solely to the other two parties hereto or the members of such other two parties’ respective Groups.

9.5 Notices. All notices, requests, demands, waivers and other communications under this Agreement, any Ancillary Agreement or the Tax Indemnification and Allocation Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or by facsimile transmission or mailed (certified or registered mail, postage prepaid, return receipt requested):

If to PC Mall, to:	PC Mall, Inc. 2555 West 190th Street, Suite 201 Torrance, California 90504 Attention: Chief Executive Officer Fax No.: (310) 353-7411
with a copy to:	PC Mall, Inc. 2555 West 190th Street, Suite 201 Torrance, California 90504 Attention: General Counsel Fax No.: (310) 630-3992

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If to eCOST: eCOST.com, Inc. 2555 West 190th Street, Suite 106 Torrance, California 90504 Attention: Chief Executive Officer Fax No.: (310) 630-3578

or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which hand delivered, upon transmission of the facsimile transmission by the sender and issuance by the transmitting machine of a confirmation slip confirming that the number of pages constituting the notice have been transmitted without error, or on the third business day following the date on which so mailed, except for a notice of change of address, which shall be effective only upon receipt thereof. In the case of a notice sent by facsimile transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the address provided for above. However, such mailing shall in no way alter the time at which the facsimile notice is deemed received. In no event shall the provision of notice pursuant to this Section 10.5 constitute notice for service of process.

9.6 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby or thereby, as the case may be, is not affected in any manner adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

9.7 Force Majeure. No party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

9.8 Expenses. eCOST shall pay all third-party costs, fees and expenses relating to the performance of its obligations under this Agreement.

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9.9 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

9.10 Waivers of Default. Waiver by any party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other party.

9.11 Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived.

9.12 Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment, supplement or modification.

9.13 Interpretation. Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires. The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement (or the applicable Ancillary Agreement) as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement (or such Ancillary Agreement). Article, Section, Exhibit, Schedule and Appendix references are to the Articles, Sections, Exhibits, Schedules and Appendices to this Agreement (or the applicable Ancillary Agreement) unless otherwise specified. The word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive.

9.14 Cooperation. PC Mall and eCost agree to, and to cause their Affiliates to, cooperate and use reasonable efforts to promptly (a) comply with all requirements of this Agreement, ERISA, the Code and other laws and regulations which may be applicable to the matters addressed herein, and (b) subject to applicable law, provide each other with such information reasonably requested by the other Party to assist the other Party in administering its Plans and complying with applicable law and regulations and the terms of this Agreement.

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9.15 Subsidiaries. Each of the parties hereto shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such party or by any entity that is contemplated to be a Subsidiary of such party on and after the Group Status Change Date.

9.16 Fiduciary Matters; Consent of Third Parties. PC Mall and eCost each acknowledge that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination that to do so would violate such a fiduciary duty or standard. If any provision of this Agreement is dependent on the consent of any third party and such consent is withheld, PC Mall and eCost shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the full extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, PC Mall and eCost shall negotiate in good faith to implement the provision in a mutually satisfactory manner.

9.17 Governmental Notices; Cooperation. Notwithstanding anything in this Agreement to the contrary, all actions contemplated herein which are to be consummated pursuant to this Agreement shall be subject to such notices to, and/or approvals by, the Internal Revenue Service (or any other governmental agency or entity) as are required or deemed appropriate by the sponsor of the applicable Plan. Each of PC Mall and eCost agrees to use its commercially reasonable efforts to cause all such notices and/or approvals to be filed or obtained, as the case may be. Each party hereto shall reasonably cooperate with the other parties with respect to any government filings, employee notices or any other actions reasonably necessary to maintain and implement the Plans covered by this Agreement.

9.18 Limitation of Damages. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY OR ANY OF ITS GROUP MEMBERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS IN CONNECTION WITH ANY CLAIMS, LOSSES, DAMAGES, OR INJURIES ARISING OUT OF THE CONDUCT OF SUCH PARTY PURSUANT TO THIS AGREEMENT.

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IN WITNESS WHEREOF, the parties have duly executed and entered into this Agreement, as of the date first above written.

PC MALL, INC.
By:	/S/    THEODORE R. SANDERS
Name:	Theodore R. Sanders
Title:	Chief Financial Officer

ECOST.COM, INC.
By:	/S/    ADAM SHAFFER
Name:	Adam Shaffer
Title:	Chief Executive Officer

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Schedule 5.1(b)

The exercise prices for each PC Mall Adjusted Option and eCost Option will be determined as follows:

1. Calculate the aggregate intrinsic value of the PC Mall Stock Option immediately prior to the Distribution and determine the ratio of the exercise price for the PC Mall Stock Option to the market value of PC Mall Common Stock immediately prior to the Distribution (the “Pre-Distribution Exercise Price to Market Price Ratio”).

2. Calculate the preliminary PC Mall Adjusted Option exercise price by dividing (a) the market value of PC Mall Common Stock (without eCost) immediately after the Distribution by (b) the sum of (i) the market value of PC Mall Common Stock immediately after the Distribution and (ii) the market value of eCost Common Stock immediately after the Distribution multiplied by the Distribution Ratio, and multiplying the result by the exercise price for the PC Mall Stock Option.

3. Divide the preliminary PC Mall Adjusted Option exercise price by the market value of PC Mall Common Stock immediately after the Distribution to determine the “PC Mall Adjusted Exercise Price to Market Price Ratio.” If the PC Mall Adjusted Exercise Price to Market Price Ratio is less than the Pre-Distribution Exercise Price to Market Price Ratio, increase the preliminary PC Mall Adjusted Option exercise price to align the PC Mall Adjusted Exercise Price to Market Ratio with the Pre-Distribution Exercise Price to Market Price Ratio in order to determine the final Adjusted PC Mall Option exercise price.

4. Calculate the preliminary eCost Option exercise price by multiplying the exercise price for the PC Mall Stock Option by the result obtained by dividing (a) one minus the fraction calculated in paragraph 2 above by (b) the Distribution Ratio.

5. Divide the preliminary eCost Option exercise price by the market value of eCost Common Stock immediately after the Distribution to determine the “eCost Adjusted Exercise Price to Market Price Ratio.” If the eCost Adjusted Exercise Price to Market Ratio is less than the Pre-Distribution Exercise Price to Market Price Ratio, increase the preliminary eCost Option exercise price to align the eCost Adjusted Exercise Price to Market Price Ratio with the Pre-Distribution Exercise Price to Market Price Ratio in order to determine the final eCost Option exercise price.

6. Add the aggregate intrinsic values of the Adjusted PC Mall Option and eCost Option and compare the sum to the aggregate intrinsic value calculated in paragraph 1 above and make final adjustments, if necessary, so that the aggregate intrinsic values of the Adjusted PC Mall Option and eCost Option do not exceed the original aggregate intrinsic value of the PC Mall Stock Option.

EX-10.59

EXHIBIT 10.59

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into on September 1, 2004, by and between eCost.com, Inc., a Delaware corporation (“eCost”), and PC Mall, Inc., a Delaware corporation (“PC Mall”).

WHEREAS, eCost is currently a subsidiary of PC Mall;

WHEREAS, eCost is considering an initial public offering of its Common Stock (“IPO”);

WHEREAS, PC Mall will own not less than eighty percent (80%) of the issued and outstanding shares of eCost common stock (the “Retained Shares”) following the IPO;

WHEREAS, subject to the terms and conditions set forth in that certain Master Separation and Distribution Agreement (the “Master Separation and Distribution Agreement”), by and between PC Mall and eCost, dated as of the date hereof, PC Mall intends to distribute to its stockholders, approximately six months following the closing of the IPO, all of the Retained Shares in a tax-free distribution (the “Distribution”); and

WHEREAS, eCost and PC Mall desire to establish terms and conditions for the registration for public resale of the Retained Shares after the IPO and prior to the Distribution in the event the Master Separation and Distribution Agreement is terminated or PC Mall otherwise determines not to effect the Distribution.

NOW, THEREFORE, in consideration of the premises and mutual promises and representations contained herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto do mutually covenant, stipulate and agree as follows:

Section 1. Definitions.

The following terms shall have the following meanings unless the context otherwise indicates:

“Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Business Day” means a day on which The Nasdaq Stock Market is open for business.

“Demand Registration” means a registration of Registrable Shares under the Act pursuant to a Registration Request given under Section 2 hereof.

“Indemnified Persons” shall have the meaning given in Section 9 hereof.

“Maximum Amount” shall have the meaning given in Section 6 hereof.

“NASDAQ” means the Nasdaq National Market of The Nasdaq Stock Market.

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“Piggyback Registration” means registration of Registrable Shares under the Act pursuant to Section 3 hereof.

“Piggyback Request” means a written request to eCost pursuant to Section 3 hereof for the registration of Registrable Shares pursuant to the Act.

“Priority” shall have the meaning given in Section 6 hereof.

“Registration Expenses” shall have the meaning given in Section 5 hereof.

“Registration Request” means a written request to eCost pursuant to Section 2 hereof for Demand Registration of Registrable Shares pursuant to the Act.

“Registrable Shares” means the Fourteen Million (14,000,000) Shares covered by this Agreement which will be owned by PC Mall after the IPO and prior to the Distribution, such number to be equitably adjusted in the event of a stock split, stock dividend, or combination or reclassification of Shares.

“Selling Expenses” shall have the meaning given in Section 5 hereof.

“Shares” means shares of the Common Stock, $0.001 par value, of eCost.

“SEC” means the Securities and Exchange Commission.

Section 2. Demand Registration.

(a) At any time during the period beginning one hundred eighty-one (181) days following the IPO and prior to the Distribution or, should the Master Separation and Distribution Agreement be terminated prior to the Distribution, at any time thereafter, PC Mall may submit a Registration Request for Demand Registration covering all or part of the Registrable Shares, which request must request registration of at least Three Million (3,000,000) Shares. The Registration Request shall state the number of Registrable Shares to be registered and the intended plan of distribution thereof. eCost shall be obligated to honor Registration Requests to register Registrable Shares pursuant to this Section 2 on a total of only five (5) occasions. A request withdrawn pursuant to Subsection 2(c) hereof or deemed to be a Piggyback Registration pursuant to Subsection 2(d) hereof shall not be counted as a Registration Request for this purpose. eCost shall be deemed to have satisfied its obligation under this Section 2 with respect to a Registration Request if a registration statement filed pursuant to a Registration Request becomes effective under the Act and remains effective for the period required hereby, or if the failure of such a registration statement to become or remain effective results primarily from any action or inaction of PC Mall.

Subject to the conditions and limitations of Section 4 hereof, eCost will use its commercially reasonable efforts to file a registration statement under the Act registering the Registrable Shares covered by a Registration Request within forty-five (45) days after it receives such Registration Request unless such Registration Request is withdrawn as permitted by Subsection 2(c) hereof.

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(b) The right to Demand Registration is subject to the procedures in Section 4 hereof and the following additional conditions and limitations:

(i) PC Mall may withdraw the Registrable Shares from a Registration Request at any time prior to the time the registration statement becomes effective, provided that eCost may ignore a notice of withdrawal made within twenty four (24) hours of the time the registration statement becomes effective. Following such a withdrawal, eCost shall not take any further action to register the withdrawn Registrable Shares, and shall not be obligated to register any Registrable Shares if the number of non-withdrawn Registrable Shares is less than Three Million (3,000,000) Shares. However, except as otherwise provided in Subsection 2(c) or (d) hereof, a Registration Request, once made, shall count as having been made for purposes of Subsection 2(a), unless it is withdrawn by PC Mall within fifteen (15) days after having been made or it is withdrawn before eCost devotes any significant efforts to the preparation of the registration statement.

(ii) No Registration Request may be made within ninety (90) days after the effective date of a registration statement filed by eCost under the Act covering an underwritten public offering of its equity securities (except for the registration statement relating to the IPO);

(iii) Unless otherwise agreed to by eCost, any Demand Registration must relate to a firm commitment underwriting for which the managing underwriter shall be reasonably satisfactory to eCost (such satisfaction not to be withheld unreasonably) or a non-underwritten offering on a “shelf” basis in accordance with Rule 415 under the Act.

(iv) eCost shall be permitted to use any registration form available to it for the registration of Registrable Shares, and shall not be obligated to include in the prospectus any information that may be incorporated by reference or that is not required to be included therein by the applicable registration form.

(v) No Registration Request may be made by PC Mall if the amount of shares proposed to be sold could be sold by PC Mall without limitation under Rule 144 under the Act.

(c) Notwithstanding the foregoing, if eCost is aware at the time it receives a Registration Request that a registered public sale of Shares is being contemplated or is in the process of being prepared (except as provided in Section 7 hereof), it will notify PC Mall of the relevant facts, and PC Mall shall have the right to withdraw the Registration Request by written notice given to eCost within ten (10) days after eCost’s notice under this Subsection 2(c), in which case such Registration Request will be deemed not to have been made for purposes of Subsection 2(a).

(d) For an additional ninety (90) days following the date on which PC Mall may first submit a Registration Request for Demand Registration, eCost will be entitled to include Shares in any Demand Registration and to reduce the number of Shares to be sold by PC Mall thereunder to a minimum of twenty percent (20%), collectively, of the total offering plus any underwriters’ over-allotment option. If, as a result of this cutback procedure, the number of Shares sold by PC Mall in such offering constitutes less than the number of Shares requested to be registered by PC Mall, the registration would be treated as a Piggyback Registration under Section 3 below, and a Registration Request will be deemed not to have been made for purposes of Subsection 2(a) hereof.

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Section 3. Piggyback Registration. If at any time following one hundred eighty (180) days after the IPO eCost proposes to register any Shares under the Act for sale to the public by eCost or any other person (except as provided in Section 7 hereof), eCost shall, not less than fifteen (15) days prior to the proposed date of filing of a registration statement under the Act, give written notice to PC Mall of its intention to do so. A Piggyback Request from PC Mall shall state the number of Registrable Shares requested to be registered. If eCost receives a Piggyback Request from PC Mall given within fifteen (15) days after eCost’s notice under this Section 3, eCost, subject to the conditions and limitations of Section 4 hereof, will use its commercially reasonable efforts to cause the Registrable Shares covered by Piggyback Request to be so registered under the Act in the proposed registration statement if the proposed registration statement becomes effective, but eCost shall have no obligation to cause, or use any efforts to cause, any such registration statement to become effective. Registrable Shares covered by a Piggyback Request shall be sold pursuant to the same plan of distribution that applies to the majority of the other Shares covered by such registration statement, except to the extent that eCost otherwise agrees in writing. The rights to Piggyback Registration granted by this Section 3 may be exercised an unlimited number of occasions following the IPO. No Piggyback Request may be made by PC Mall if the amount of Shares proposed to be sold could be sold by PC Mall without limitation under Rule 144 under the Act.

Section 4. Registration Procedures.

(a) If eCost is required by the provisions of Section 2 to effect Demand Registration of any Registrable Shares, eCost will promptly:

(i) To the extent required by Section 2, prepare and file with the SEC a registration statement (which shall be on Form S-3, unless eCost does not qualify for use of Form S-3 in such registration, in which case such registration statement shall be on any other available form selected by eCost) with respect to such Registrable Shares and thereafter use its commercially reasonable efforts to cause such registration statement to become effective promptly.

(ii) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period of one hundred twenty (120) days (excluding any days during which the right to sell shares is suspended pursuant to Subsection 4(b) hereof) or such lesser period as may be necessary to comply with the provisions of the Act with respect to the disposition of all Registrable Shares covered by such registration statement in accordance with the plan of distribution set forth in such registration statement;

(iii) Comply with Rule 424 under the Act relating to filing of prospectuses and furnish to each seller and to each underwriter such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale of the Registrable Shares covered by such registration statement;

(iv) If the offering is to be underwritten, eCost and PC Mall shall enter into a written agreement with any managing underwriter selected in the manner herein provided in such form and containing such provisions as are satisfactory to eCost and PC Mall (such satisfaction not

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to be withheld unreasonably), and as are customary in the securities business for such an arrangement between such underwriter, such seller and corporations of eCost’s size and investment stature and eCost shall take such other actions as PC Mall shall reasonably request in order to expedite or facilitate the disposition of such Registrable Shares;

(v) Furnish, at the request of PC Mall, on the date that the underwriting agreement is signed and on the date that Registrable Shares are delivered to the underwriters for sale pursuant to such registration: (A) an opinion of counsel representing eCost for the purposes of such registration, dated such dates, respectively, addressed to the underwriters and to PC Mall, stating that such registration statement has become effective under the Act and that (I) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and (II) the registration statement, the related prospectus and each amendment or supplement thereof comply as to form in all material respects with the requirements of the Act (except that such counsel need not express any opinion as to the financial statements or any other financial statements, notes thereto and related schedules and other financial and statistical data contained or incorporated by reference therein, and (III) to such other effects as reasonably may be requested by counsel for the underwriters or by PC Mall or its counsel, and (B) a “comfort letter” in customary form dated such dates from the independent public accountants retained by eCost, addressed to the underwriters and to PC Mall, stating that they are independent public accountants within the meaning of the Act and that, in the opinion of such accountants, the financial statements of eCost included or incorporated by reference in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Act, and such letter shall additionally cover such other financial matters as are customary to cover in such a letter (including information as to the period ending no more than five (5) business days prior to the date of such letter) with respect to the registration statement in respect of which such letter is being given as such underwriters reasonably may request;

(vi) Upon receipt of such confidentiality agreements as eCost may reasonably request, make available for inspection by PC Mall, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by PC Mall or underwriter, all financial and other records, pertinent corporate documents and properties of eCost, and cause eCost officers, directors and employees to supply all information reasonably requested by PC Mall or any underwriter, attorney, accountant or agent in connection with such registration statement, in each case in order to confirm disclosures contained in the registration statement or incorporated therein by reference;

(vii) Give PC Mall two (2) days’ advance notice of its anticipated filing date of the registration statement and amendments thereto;

(viii) Use commercially reasonable efforts to cause the Registrable Shares covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable PC Mall thereof to consummate the disposition of such Registrable Shares;

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(ix) Comply with all applicable rules and regulations of the SEC, and make generally available to its security holders, as soon as reasonably practicable no later than the date the Form 10-Q or Form 10-K, as the case may be, covering the fourth fiscal quarter of eCost commencing after the effective date of the registration statement, is required to be filed with the SEC, an earnings statement covering the period of at least twelve (12) consecutive months beginning with the first day of eCost’s first calendar quarter commencing after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Act and Rule 158 thereunder;

(x) Provide a transfer agent and registrar, which may be the same entity as the transfer agent, for all the Registrable Shares covered by such registration statement not later than the effective date of such registration statement;

(xi) Permit PC Mall to participate through counsel reasonably acceptable to eCost in the preparation of such registration statement and, if specifically requested by such counsel, in discussions between eCost and the SEC or its staff with respect to such registration statement, and to include in such registration statement material, furnished to eCost in writing, which in the written opinion of such counsel is necessary to include in order to avoid potential liability for PC Mall;

(xii) Use commercially reasonable efforts to cause all such Registrable Shares covered by such registration statement to be listed or quoted on the principal securities exchange (including NASDAQ) on which similar securities issued by eCost are then listed or quoted, if the listing or quoting of such Registrable Shares is then permitted under the rules of such exchange;

(xiii) If there is a stop order relating to or suspension of the effectiveness of the registration statement, use commercially reasonable efforts to have the stop order or suspension of effectiveness withdrawn as promptly as practicable;

(xiv) Use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make generally available to its security holders an earnings statement satisfying the provisions of Section 11(a) of the Act, no later than forty-five (45) days after the end of any twelve (12) month period (or ninety (90) days, if such period is a fiscal year) (A) commencing at the end of any fiscal quarter in which the Registrable Shares are sold to underwriters in a firm or best efforts underwritten offering, or (B) if not sold to underwriters in such an offering, beginning with the first month of the first fiscal quarter of eCost commencing after the effective date of the registration statement, which statements shall cover such twelve (12) month period; and

(xv) Use commercially reasonable efforts to register or qualify the Registrable Shares covered by such registration statement under the securities or blue sky laws of such jurisdictions as the sellers of Registrable Shares or the managing underwriter reasonably shall request; provided, however, that eCost shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process or taxation in any such jurisdiction.

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(b) Notwithstanding the foregoing, eCost may delay filing a registration statement otherwise required to be filed pursuant to this Agreement and may withhold efforts to cause a registration statement covering Registrable Shares to become effective, for up to sixty (60) days in the aggregate during any twelve (12) month period, if eCost determines in good faith that such registration statement might (i) interfere with or affect the negotiation or completion of any transaction that is being contemplated by eCost (whether or not a final decision has been made to undertake such transaction) at the time the right to delay is exercised, or (ii) involve initial or continuing disclosure obligations that might not be in the best interest of eCost’s stockholders. If, after a registration statement becomes effective, eCost notifies the holders of Registrable Shares covered by such registration statement that eCost considers it appropriate for the registration statement to be amended or supplemented, the holders of such Registrable Shares shall suspend any further sales of their Registrable Shares until eCost advises them that the registration statement has been amended or supplemented. eCost may give such advice if there exists at any time material non-public information relating to eCost that, in the reasonable opinion of eCost’s Board of Directors, would be prejudicial to eCost or its stockholders to be disclosed at that time. eCost agrees with PC Mall that it will use commercially reasonable efforts to amend or supplement the registration statement, as required to permit sales of the Registrable Shares covered thereby to resume within ninety (90) days as promptly as is practicable after it has given the notice referred to in the preceding sentence. The ninety (90) day time period referred to in Subsection 4(a)(ii) hereof during which the registration statement must be kept current after its effective date shall be extended for an additional number of Business Days equal to the number of Business Days during which the rights to sell shares was suspended pursuant to the preceding sentence, but in no event will eCost be required to update the registration statement after the date that its obligation to register Registrable Shares terminates pursuant to Section 8 hereof.

(c) The provisions of Subsections 4(a)(iii), (iv) and (vii), 4(b) (except that eCost will have no obligation to amend or supplement the registration statement), and 4(d) hereof shall also apply to Piggyback Registrations pursuant to Section 3 hereof.

(d) In connection with each registration hereunder, PC Mall will (i) furnish promptly to eCost in writing such information with respect to themselves and the proposed distribution by PC Mall as reasonably shall be requested by eCost in order to assure compliance with federal and applicable state securities laws, and (ii) comply with all applicable rules promulgated by the SEC or any securities exchange (including NASDAQ).

(e) Before filing a registration statement covering Registrable Shares, a prospectus constituting a part thereof or amendments or supplements thereto, shall be furnished to counsel for PC Mall, including in such registration statement copies of all such documents proposed to be filed, all of which shall be subject to the approval of such counsel in the exercise of such counsels’ reasonable judgment.

(f) If any registration statement covering Registrable Shares refers to PC Mall by name or otherwise as the holder of any securities of eCost, then PC Mall shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to eCost (such satisfaction not to be withheld unreasonably), to the effect that PC Mall’s holding of Shares is not to be construed as a recommendation by PC Mall of the investment quality of the Shares covered thereby and that such holding does not imply that PC Mall will assist in meeting any future financial

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requirements of eCost, or (ii) in the event that such reference to PC Mall by name or otherwise is not in the judgment of eCost, as advised by counsel, required by the Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to PC Mall.

Section 5. Expenses.

(a) All expenses incurred by eCost in complying with Section 2 hereof, including without limitation all registration and filing fees, printing expense, fees and disbursements of counsel and independent public accountants for eCost, fees and expenses (including counsel fees) incurred in connection with complying with state securities or “blue sky” laws (other than those which by law must be paid by the selling security holders), fees of securities exchanges or the National Association of Securities Dealers, Inc., fees of transfer agents and registrars, but excluding any Selling Expenses, are called “Registration Expenses.” All underwriting discounts, selling commissions and transfer taxes applicable to the sale of outstanding shares and any legal fees and expenses of counsel or other advisers and agents of the holders of Registrable Shares being registered are called “Selling Expenses.” PC Mall will pay all Registration Expenses and all Selling Expenses.

(b) All expenses incurred by eCost in complying with Section 3 hereof, including without limitation all registration and filing fees, printing expense, fees and disbursements of counsel and independent public accountants for eCost, fees and expenses (including counsel fees) incurred in connection with complying with state securities or “blue sky” laws (other than those which by law must be paid by the selling security holders), fees of securities exchanges or the National Association of Securities Dealers, Inc., fees of transfer agents and registrars, but excluding any Selling Expenses, are called “Registration Expenses.” All underwriting discounts, selling commissions and transfer taxes applicable to the sale of outstanding shares and any legal fees and expenses of counsel or other advisers and agents of the holders of Registrable Shares being registered are called “Selling Expenses.” eCost will pay all Registration Expenses. All Selling Expenses shall be borne by PC Mall.

Section 6. Marketing Arrangements.

(a) Except as otherwise provided in Section 2(d), if (i) PC Mall requests registration of Registrable Shares, (ii) the offering proposed to be made is to be an underwritten public offering, and (iii) the managing underwriter of such public offering furnishes a written opinion that the total amount of securities to be included in such offering would exceed the maximum amount of securities (the “Maximum Amount”) (as specified in such opinion) which can be marketed at a price reasonably related to the then-current market value of such securities (or the anticipated market price, if no trading market then exists) and without materially and adversely affecting such offering or the trading market for Shares, then eCost and PC Mall shall have a right to participate in such offering in the following order of priority (a “Priority”) until the number of Shares included in the offering reaches the Maximum Amount, and no additional Shares will be included in the registration statement:

First Priority shall be to eCost for Shares to be sold for the account of eCost, except to the extent that Shares are registered pursuant to a Registration Request for Demand Registration pursuant to Section 2 hereof, in which case the Second Priority shall be followed.

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Second Priority shall be to PC Mall pursuant to a Registration Request for Demand Registration pursuant to Section 2 hereof.

Third Priority shall be to eCost for Shares to be sold for the account of eCost that do not qualify for First Priority.

Fourth Priority shall be to holders of Shares who have a contractual right granted to such holders prior to the date hereof to have Shares registered pursuant to a registration statement initiated on their request or demand on terms comparable to Section 2 hereof.

Fifth Priority shall be to holders of Shares who have a contractual right granted to such holder on or prior to the date hereof to have their Shares registered pursuant to piggyback or incidental rights on terms comparable to Section 3 hereof (in a registration statement that such holders do not have a right to initiate), including PC Mall’s Piggyback Rights under this Agreement.

Sixth Priority shall be to all other holders of Shares in any sequence that may be agreed upon among the holders of such Shares and/or eCost.

To the extent that some but not all of the Shares owned by persons within any of the Priorities listed above are not included within the Maximum Amount, the Shares to be included in the registration statement shall be allocated pro rata to holders in such Priority in proportion to the respective numbers of Shares each such person in such Priority wishes to include in the registration statement.

(b) eCost represents and warrants that it has not granted any registration rights or entered into any agreements obligating it to register any of its securities under the Act that are inconsistent with the foregoing priorities.

(c) eCost agrees that it will not incur any future obligations to register Shares under the Act that are inconsistent with the Priorities in this Section 6.

Section 7. Exceptions to eCost’s Obligations. The right to Demand Registration and Piggyback Registration shall not apply if, in the opinion of counsel for eCost, such registration would jeopardize the tax-free status of the Distribution. In addition, the right to Piggyback Registration and the provisions of Subsection 2(c) hereof shall not apply, unless eCost otherwise agrees in writing, to any registration statement:

(a) to be filed on a registration form which is unavailable for the registration of Registrable Shares;

(b) relating primarily to Shares to be offered pursuant to (i) an employee benefit plan, or (ii) a dividend or interest reinvestment plan (including such a plan that has an open enrollment or cash investment feature);

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(c) relating to Shares to be issued in the acquisition of another business, through a merger, consolidation, exchange of securities or otherwise;

(d) relating to eCost securities to be issued for a consideration other than solely cash;

(e) relating to eCost securities to be offered primarily to existing security holders of eCost, through a “rights offering” or otherwise;

(f) relating primarily to eCost securities to be issued on the exercise of options, warrants and similar rights, or on the conversion or exchange of other securities, issued by eCost or any other person;

(g) relating primarily to debt securities of eCost, including debt securities that are convertible or exchangeable for equity securities of eCost; or

(h) that may become effective automatically upon filing with the SEC pursuant to Rule 462 under the Act or otherwise.

Section 8. Termination of Registration Rights. Notwithstanding the foregoing provisions, eCost’s obligation to register Registrable Shares under this Agreement shall terminate as to any particular Registrable Shares (a) on the date of the Distribution, (b) when such Registrable Shares have been sold in an offering registered under the Act or in a sale exempt from registration under the Act, (c) when such Registrable Shares shall have been effectively registered under the Act for a period of at least ninety (90) days, or (d) when a written opinion, to the effect that such Registrable Shares may be sold without registration under the Act or applicable state law and without restriction as to the quantity and manner of such sales, shall have been received from counsel for eCost which counsel is reasonably acceptable to the owner of such Registrable Shares (which satisfaction shall not be withheld unreasonably).

Section 9. Indemnification.

(a) In the event of any registration of Registrable Shares under the Act pursuant to this Agreement, eCost will, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, the seller of any Registrable Shares covered by such registration statement, each person or entity that participates as an underwriter or qualified independent underwriter/pricer (“independent underwriter”), if any, in the offering or sale of such securities, each officer, director or partner of such underwriter or independent underwriter, and each other person, if any, who controls such seller or any such underwriter within the meaning of the Act (collectively, the “Indemnified Persons”), against any and all losses, claims, damages or liabilities, joint or several, and expenses (including fees of counsel and any amounts paid in any settlement effected with eCost’s consent, which consent shall not be unreasonably withheld) to which such Indemnified Persons may become subject under the Act, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof), or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which Registrable Shares were registered under the Act or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the

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circumstances under which they were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary, final or summary prospectus, together with the documents incorporated by reference therein (as amended or supplemented if eCost shall have filed with the SEC any amendment thereof or supplement thereto), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) any violation by eCost of any federal or state rule or regulation applicable to eCost and relating to action required of or inaction by eCost in connection with any such registration. eCost will reimburse Indemnified Persons for any reasonable legal or any other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding. Notwithstanding the foregoing, eCost shall not be liable to any Indemnified Person to the extent that any such loss, claim, damage, liability (or action or proceeding, whether commenced or threatened, in respect thereof) or expense arises out of or is based upon (i) any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to eCost by or on behalf of any such Indemnified Person, for use in the preparation of the registration statement or (ii) the failure of any such Indemnified Person to comply with any legal requirement applicable to any such Indemnified Person to deliver a copy of a prospectus or any supplements or amendments thereto after eCost has made such documents available to such persons, and it is established that delivery of such prospectus, supplement or amendment would have cured the defect giving rise to such loss, claim, damage, liability or expense. Such indemnity and reimbursement of expenses shall remain in full force and effect following the transfer of Registrable Shares by such seller.

(b) eCost, as a condition to including any Registrable Shares in any registration statement filed in accordance with this Agreement, shall have received an undertaking reasonably satisfactory to it from the prospective seller of such Registrable Shares and any underwriter or independent underwriter, to indemnify and hold harmless (in the same manner and to the same extent as set forth in Subsection 9(a)) eCost and its directors and officers and each person controlling eCost within the meaning of the Act and all other prospective sellers and their directors, officers, general and limited partners and respective controlling persons with respect to any statement or alleged statement in or omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to eCost or its representatives by or on behalf of such seller or underwriter for use in the preparation of such registration statement; provided, however, that the aggregate amount which any such seller or prospective seller shall be required to pay pursuant to such undertaking shall be limited to the amount of the net proceeds received by such person upon the sale of the Registrable Shares pursuant to the registration statement giving rise to such claim.

(c) Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 9, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, however, that the failure of any indemnified party to give notice as provided

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herein shall not relieve the indemnifying party of its obligations under this Section 9, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party; and provided, further that the indemnifying party shall not be entitled to so participate or so assume the defense if, in the indemnified party’s reasonable judgment, a conflict of interest between the indemnified party and the indemnifying party exists in respect of such claim. After notice from the indemnifying party to such indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 9 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof unless the indemnifying party has failed to assume the defense of such claim or to employ counsel reasonably satisfactory to such indemnified party; and provided, further, that the indemnified parties shall have the right to employ one counsel to represent such indemnified parties if, in such indemnified parties’ reasonable judgment, a conflict of interest between the indemnified parties and the indemnifying parties exists in respect of such claim, and in that event the fees and expenses of such separate counsel shall be paid by the indemnifying party; and provided, further, that if, in the reasonable judgment of any of the indemnified parties, a conflict of interest between such indemnified parties and any other indemnified parties exists in respect of such claims, such indemnified parties shall be entitled to additional counsel or counsels and the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels. No indemnified party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimants or plaintiffs to such indemnified party of a release from all liability in respect to such claim or litigation. No indemnifying party will be liable for any settlement effected without its prior written consent.

(d) If the indemnification provided for in this Section 9 is unavailable or insufficient to hold harmless an indemnified party under Subsections 9(a) and (b), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in Subsections 9(a) and (b) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 9 were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this Section 9. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this Section 9 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim (which shall be limited as provided in Subsection 9(c) if the indemnifying party has assumed the defense of any such action in

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accordance with the provisions thereof which is the subject of this Section 9). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 9 to the contrary, no indemnifying party (other than eCost) shall be required pursuant to this Section 9 to contribute any amount in excess of the proceeds received by such indemnifying party from the sale of Registrable Shares in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate.

(e) The provisions of this Section 9 shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain in full force and effect following the transfer of the Registrable Shares by any such party.

Section 10. Compliance with Rule 144.

(a) At the request of PC Mall and if PC Mall proposes to sell Registrable Shares in compliance with Rule 144 under the Act (“Rule 144”), or any similar rule, eCost shall (a) forthwith furnish to PC Mall a written statement as to its compliance with the filing requirements of the SEC as set forth in such Rule and (b) make such additional filings with the SEC as will enable PC Mall to make sales of Registrable Shares pursuant to such Rule.

(b) With a view to making available to PC Mall the benefits of Rule 144 under the Securities Act or any other similar rule or regulation of the Commission that may at any time permit PC Mall to sell securities of eCost to the public without registration, eCost agrees to (i) comply with the provisions of paragraph (c)(1) of Rule 144; and (ii) file with the Commission in a timely manner all reports and other documents required to be filed with the Commission pursuant to Section 13 or 15(d) under the Exchange Act by companies subject to either of such sections, irrespective of whether eCost is then subject to such reporting requirements

Section 11. Miscellaneous.

(a) Binding and Benefit. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, except that no party may assign or transfer its rights or obligations under this Agreement without the prior written consent of the other parties hereto; provided, however, that the obligation to register Registrable Shares shall be enforceable by direct or remote transferees of Registrable Shares now owned by PC Mall only if the transfer results from the death of any person, a gift made without consideration or the transfer of all or substantially all of the assets of an entity, by merger, consolidation, asset sale or otherwise. Without limiting the foregoing, any transferee of Registrable Shares must agree in writing to be bound by the provisions of Subsection 6(c) hereof.

(b) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, without reference to choice of law principles, including matters of construction, validity and performance.

(c) Notices. Except as expressly otherwise provided herein, all notices, requests, demands, waivers and other communications under this Agreement shall be in writing and shall

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be deemed to have been duly given if delivered personally or by facsimile transmission or mailed (certified or registered mail, postage prepaid, return receipt requested):

If to PC Mall, to:	PC Mall, Inc. 2555 West 190th Street, Suite 201 Torrance, California 90504 Attention: Chief Executive Officer Fax No.: (310) 353-7411
If to eCOST:	eCOST.com, Inc. 2555 West 190th Street, Suite 106 Torrance, California 90504 Attention: Chief Executive Officer Fax No.: (310) 630-3578

or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which hand delivered, upon transmission of the facsimile transmission by the sender and issuance by the transmitting machine of a confirmation slip confirming that the number of pages constituting the notice have been transmitted without error, or on the third business day following the date on which so mailed, except for a notice of change of address, which shall be effective only upon receipt thereof. In the case of a notice sent by facsimile transmission, the sender shall contemporaneously mail a copy of the notice to the addressee at the address provided for above. However, such mailing shall in no way alter the time at which the facsimile notice is deemed received. In no event shall the provision of notice pursuant to this Section 8.4 constitute notice for service of process.

(d) Entire Agreement. This Agreement, the Master Separation and Distribution Agreement, the other ancillary agreements and the exhibits and schedules referenced or attached thereto constitute the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of or by and between the parties hereto in respect of such subject matter and may not be amended except by a written instrument hereafter signed by each of the parties hereto.

(e) Counterparts. This Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed an original, and such counterparts together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

ECOST.COM, INC.
By:	/s/    ADAM SHAFFER
Name:	Adam Shaffer
Title:	Chief Executive Officer
PC MALL, INC.
By:	/s/    THEODORE R. SANDERS
Name:	Theodore R. Sanders
Title:	Chief Financial Officer

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