93-021

Response August 20, 1993

Request

July 12,1993

Mr. W. Val Oveson

Chairman

Utah State Tax Commission

160 East Third South

Salt Lake City, Utah 84134

Dear Mr. Oveson:

It was a pleasure on Friday, discussing XXXXX's desire to expand into Utah (through it or its affiliates) and your willingness to grant it certain favorable corporate income, franchise and sales tax rulings in anticipation of such expansion.

As you know, XXXXX is considering buying or leasing land in Utah and constructing a warehouse and distribution facility to be used in its catalog mail-order operation. The facility may be approximately one million square feet in size, cost up to $$$$$ and employ 500-800 people.

Prior to the facility becoming operational i.e. shipping inventory to customers, XXXXX may have employees and/or representatives present in Utah engaging in such activities as (but not necessarily limited to) the following:

· engineering, architecture, construction, construction supervision, etc.

· equipment and computer system design, purchase, installation, programming testing, etc.

· hiring, testing, educating and training a work force

I understand that you agree that these and related activities, prior to all critical testing being complete and the facility becoming operational, will not constitute nexus or doing business in Utah for purposes of the corporate income, franchise and sales taxes. As discussed, you agreed to grant a written ruling to this effect which we hereby respectfully request.

We are currently actively negotiating to purchase a parcel of land to begin construction. However, we cannot close any transactions prior to receipt of your assurances as to the above. As a result, we anxiously await your reply.

I sincerely appreciate your assistance in this matter and look forward to working with you. Meanwhile, please call if you have any questions or comments.

Very truly yours,

XXXXX

August 20, 1993

Dear XXXXX:

As a follow up to your letter of XXXXX, the Utah State Tax Commission has drafted an agreement outlining the tax treatment for Utah corporate franchise tax and sales tax during the period of construction of a new warehouse and distribution facility in Utah.

A copy of the agreement is attached for your review and approval. I believe the agreement covers your areas of concern. If the agreement is acceptable to you, please sign and forward a copy to me. If you need further information or have any questions, please contact me.

Sincerely,

W. Val Oveson

Chairman

AGREEMENT

The activities as outlined in XXXXX (XXXXX) letter of XXXXX (copy attached) do constitute nexus in the State of Utah for purposes of sales tax and corporate franchise tax. However, it is the parties mutual desire to arrive at an agreement to be in effect during the construction period for purposes of XXXXX's expansion into Utah with warehouse and distribution facilities.

The Utah State Tax Commission will not require XXXXX to file and pay Utah corporate franchise tax until the warehouse and distribution facility located in Utah is operational. The facility will be considered to be operational when a permit to occupy the facility is granted or shipment of inventory commences.

The Utah State Tax Commission will not require XXXXX to collect sales tax only on XXXXX's mail order sales delivered in Utah until the Utah facility is operational as outlined in the previous paragraph. However, XXXXX agrees to pay sales or use tax on all purchases or leases made in Utah and on all goods consumed by them in Utah.

Withholding tax will be withheld and paid to the Tax Commission in accordance with Utah laws for those XXXXX employees performing services in the State of Utah.

If XXXXX's activities exceed those outlined in the attached letter dated XXXXX those additional activities are not covered under this agreement.

Utah State Tax Commission For the Commission:

W. Val Oveson, Chairman Date XXXXX