arcee-ai/sec-data-full · Datasets at Hugging Face

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and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses,
acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and
overseeing and consulting with respect to our business and operational strategies, the implementation of such strategies and the evaluation
of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions
or dispositions and product or service lines. If our manager and the subsidiary do not enter into an offsetting management services agreement,
our manager will provide these services for our subsidiaries under our management services agreement. 15 Example of Calculation of Management Fee
with Adjustment for Offsetting Management Fees In order to better understand how the management
fee is calculated, we are providing the following examp Quarterly management fee: (in thousands) 1 Consolidated total assets $ 100,000 2 Consolidated accumulation amortization of intangibles 5,000 3 Total cash and cash equivalents 5,000 4 Adjusted total liabilities (10,000 ) 5 Adjusted net assets (Line 1 + Line 2 – Line 3 – Line 4) 90,000 6 Multiplied by quarterly rate 0.5 % 7 Quarterly management fee $ 450 Offsetting management fe 8 Acquired company A offsetting management fees $ (100 ) 9 Acquired company B offsetting management fees (100 ) 10 Acquired company C offsetting management fees (100 ) 11 Acquired company D offsetting management fees (100 ) 12 Total offsetting management fees (Line 8 + Line 9 – Line 10 – Line 11) (400 ) 13 Quarterly management fee payable by Company (Line 7 + Line 12) $ 50 The foregoing example provides hypothetical information
only and does not intend to reflect actual or expected management fee amounts. For purposes of the calculation of the management
fee: ● “Adjusted net assets” will be equal to, as of any calculation date, the sum of (i) our consolidated
total assets (as determined in accordance with U.S. generally accepted accounting principles, or GAAP) as of such calculation date, plus
(ii) the absolute amount of our consolidated accumulated amortization of intangibles (as determined in accordance with GAAP) as of such
calculation date, minus (iii) total cash and cash equivalents, minus (iv) the absolute amount of our adjusted total liabilities as of
such calculation date. ● “Adjusted total liabilities” will be equal to, as of any calculation date, our consolidated
total liabilities (as determined in accordance with GAAP) as of such calculation date after excluding the effect of any outstanding third-party
indebtedness. ● “Quarterly management fee” will be equal to, as of any
calculation date, the product of (i) 0.5%, multiplied by (ii) our adjusted net assets as of such calculation date; provided, however,
that with respect to any fiscal quarter in which the management services agreement is terminated, we will pay our manager a management
fee with respect to such fiscal quarter equal to the product of (i)(x) 0.5%, multiplied by (y) our adjusted net assets as of such calculation
date, multiplied by (ii) a fraction, the numerator of which is the number of days from and including the first day of such fiscal quarter
to but excluding the date upon which the management services agreement is terminated and the denominator of which is the number of days
in such fiscal quarter. ● “Total
offsetting management fees” will be equal to, as of any calculation date, fees paid
to our manager by the businesses that we acquire in the future under separate offsetting
management services agreements. 16 Transaction Services Agreements Pursuant to the management services agreement,
we have agreed that our manager may, at any time, enter into transaction services agreements with any of our businesses relating to the
performance by our manager of certain transaction-related services in connection with the acquisitions of target businesses by us or dispositions
of our property or assets. These services may include those customarily performed by a third-party investment banking firm or similar
financial advisor, which may or may not be similar to management services, in connection with the acquisition of target businesses by
us or our subsidiaries or disposition of subsidiaries or any of our property or assets or those of our subsidiaries. In connection with
providing transaction services, our manager will generally receive a fee equal to the sum of (i) 2.0% of the aggregate purchase price
of the target business up to and equal to $50 million, plus (ii) 1.5% of the aggregate purchase price of the target business in excess
of $50 million and up to and equal to $100 million, plus (iii) 1.0% of the aggregate purchase price over $100 million, subject to annual
review by our board of directors. The purchase price of a target business shall be defined as the aggregate amount of consideration, including
cash and the value of any shares issued by us on the date of acquisition, paid for the equity interests of such target business plus the
aggregate principal amount of any debt assumed by us of the target business on the date of acquisition or any similar formulation. The
other terms and conditions relating to the performance of transaction services will be established in accordance with market practice. Our manager may enter into transaction services
agreements with our subsidiaries and future subsidiaries, which agreements would be in the form prescribed by our management services
agreement. The services that our manager will provide to
our subsidiaries and future subsidiaries under the transaction services agreements will include the following services that would be
provided in connection with a specific transaction identified at the time that the transaction services agreement is entered int reviewing,
evaluating and otherwise familiarizing itself and its affiliates with the business, operations, properties, financial condition and prospects
of the future subsidiary and its target acquisition and preparing documentation describing the future subsidiary’s operations,
management, historical financial results, projected financial results and any other relevant matters and presenting such documentation
and making recommendations with respect thereto to certain of our manager’s affiliates. Any fees received by our manager pursuant to such
a transaction services agreement will be in addition to the management fee payable by us pursuant to the management services agreement
and will not offset the payment of such management fee. A transaction services agreement with any of our businesses may provide for the
reimbursement of costs and expenses incurred by our manager in connection with the acquisition of such businesses. Transaction services agreements will be reviewed, authorized and approved
by our board of directors on an annual basis. Reimbursement of Expenses We are responsible for paying costs and expenses relating to its business and operations. We agreed
to reimburse our manager during the term of the management services agreement for all costs and expenses that are incurred by our manager
or its affiliates on our behalf of, including any out-of-pocket costs and expenses incurred in connection with the performance of services
under the management services agreement, and all costs and expenses the reimbursement of which are specifically approved by our board
of directors. We will not be obligated or responsible for reimbursing or otherwise paying for any costs or expenses
relating to our manager’s overhead or any other costs and expenses relating to our manager’s conduct of its business and operations.
Also, we will not be obligated or responsible for reimbursing our manager for costs and expenses incurred by our manager in the identification,
evaluation, management, performance of due diligence on, negotiation and oversight of potential acquisitions of new businesses for which
we (or our manager on our behalf) fail to submit an indication of interest or letter of intent to pursue such acquisition, including costs
and expenses relating to travel, marketing and attendance of industry events and retention of outside service providers relating thereto.
In addition, we will not be obligated or responsible for reimbursing our manager for costs and expenses incurred by our manager in connection
with the identification, evaluation, management, performance of due diligence on, negotiating and oversight of an acquisition by us if
such acquisition is actually consummated and the business so acquired entered into a transaction services agreement with our manager providing
for the reimbursement of such costs and expenses by such business. In this respect, the costs and expenses associated with the pursuit
of add-on acquisitions may be reimbursed by any businesses so acquired pursuant to a transaction services agreement. All reimbursements will be reviewed and, in certain circumstances,
approved by our board of directors on an annual basis in connection with the preparation of year-end financial statements. 17 Termination Fee We will pay our manager a termination fee upon
termination of the management services agreement if such termination is based solely on a vote of our board of directors and our shareholders;
no other termination fee will be payable to our manager in connection with the termination of the management services agreement for any
other reason. The termination fee that is payable to our manager will be equal to the product of (i) two (2) multiplied by (ii) the sum
of the amount of the quarterly management fees calculated with respect to the four fiscal quarters immediately preceding the termination
date of the management services agreement. The termination fee will be payable in eight equal quarterly installments, with the first such
installment being paid on or within five (5) business days of the last day of the fiscal quarter in which the management services agreement
was terminated and each subsequent installment being paid on or within five (5) business days of the last day of each subsequent fiscal
quarter, until such time as the termination fee is paid in full to our manager. Our Manager as an Equity Holder Manager’s Profit Allocation Our manager owns 100% of our allocation shares,
which generally will entitle our manager to receive a 20% profit allocation as a form of preferred distribution. Upon the sale of a subsidiary,
our manager will be paid a profit allocation if the sum of (i) the excess of the gain on the sale of such subsidiary over a high-water
mark plus (ii) the subsidiary’s net income since its acquisition by us exceeds the 8% hurdle rate. The 8% hurdle rate is the product
of (i) a 2% rate per quarter, multiplied by (ii) the number of quarters such subsidiary was held by us, multiplied by (iii) the subsidiary’s
average share (determined based on gross assets, generally) of our consolidated net equity (determined according to GAAP with certain
adjustments). In certain circumstances, after a subsidiary has been held for at least 5 years, our manager may also trigger a profit allocation
with respect to such subsidiary (determined based solely on the subsidiary’s net income since its acquisition). The calculation
of the profit allocation and the rights of our manager, as the holder of the allocation shares, are governed by the operating agreement. Our board will have the opportunity to review
and approve the calculation of manager’s profit allocation when it becomes due and payable. Our manager will not receive a profit
allocation on an annual basis. Instead, our manager will be paid a profit allocation only upon the occurrence of one of the following
events, which we refer to collectively as the trigger events: ● the
sale of a material amount, as determined by our manager and reasonably consented to by a
majority of our board of directors, of the capital stock or assets of one of our subsidiaries
or a subsidiary of one of our subsidiaries, including a distribution of our ownership of
a subsidiary to our shareholders in a spin-off or similar transaction, which event we refer
to as a sale event; or ● at
the option of our manager, for the 30-day period following the fifth anniversary of the date
upon which we acquired a controlling interest in a business, which event we refer to as a
holding event. If our manager elects to forego declaring a holding event with respect to
such business during such period, then our manager may only declare a holding event with
respect to such business during the 30-day period following each anniversary of such fifth
anniversary date with respect to such business. Once declared, our manager may only declare
another holding event with respect to a business following the fifth anniversary of the calculation
date with respect to a previously declared holding event. We believe this payment timing, rather than a
method that provides for annual allocation payments, more accurately reflects the long-term performance of each of our businesses and
is consistent with our intent to hold, manage and grow our businesses over the long term. We refer generally to the obligation to make
this payment to our manager as the “profit allocation” and, specifically, to the amount of any particular profit allocation
as the “manager’s profit allocation.” Definitions used in, and an example of the calculation

and arranging for the maintaining of liability insurance, arranging for equipment rental, maintenance of all necessary permits and licenses,

acquisition of any additional licenses and permits that become necessary, participation in risk management policies and procedures; and

overseeing and consulting with respect to our business and operational strategies, the implementation of such strategies and the evaluation

of such strategies, including, but not limited to, strategies with respect to capital expenditure and expansion programs, acquisitions

or dispositions and product or service lines. If our manager and the subsidiary do not enter into an offsetting management services agreement,

our manager will provide these services for our subsidiaries under our management services agreement. 15 Example of Calculation of Management Fee

with Adjustment for Offsetting Management Fees In order to better understand how the management

fee is calculated, we are providing the following examp Quarterly management fee: (in thousands) 1 Consolidated total assets $ 100,000 2 Consolidated accumulation amortization of intangibles 5,000 3 Total cash and cash equivalents 5,000 4 Adjusted total liabilities (10,000 ) 5 Adjusted net assets (Line 1 + Line 2 – Line 3 – Line 4) 90,000 6 Multiplied by quarterly rate 0.5 % 7 Quarterly management fee $ 450 Offsetting management fe 8 Acquired company A offsetting management fees $ (100 ) 9 Acquired company B offsetting management fees (100 ) 10 Acquired company C offsetting management fees (100 ) 11 Acquired company D offsetting management fees (100 ) 12 Total offsetting management fees (Line 8 + Line 9 – Line 10 – Line 11) (400 ) 13 Quarterly management fee payable by Company (Line 7 + Line 12) $ 50 The foregoing example provides hypothetical information

only and does not intend to reflect actual or expected management fee amounts. For purposes of the calculation of the management

fee: ● “Adjusted net assets” will be equal to, as of any calculation date, the sum of (i) our consolidated

total assets (as determined in accordance with U.S. generally accepted accounting principles, or GAAP) as of such calculation date, plus

(ii) the absolute amount of our consolidated accumulated amortization of intangibles (as determined in accordance with GAAP) as of such

calculation date, minus (iii) total cash and cash equivalents, minus (iv) the absolute amount of our adjusted total liabilities as of

such calculation date. ● “Adjusted total liabilities” will be equal to, as of any calculation date, our consolidated

total liabilities (as determined in accordance with GAAP) as of such calculation date after excluding the effect of any outstanding third-party

indebtedness. ● “Quarterly management fee” will be equal to, as of any

calculation date, the product of (i) 0.5%, multiplied by (ii) our adjusted net assets as of such calculation date; provided, however,

that with respect to any fiscal quarter in which the management services agreement is terminated, we will pay our manager a management

fee with respect to such fiscal quarter equal to the product of (i)(x) 0.5%, multiplied by (y) our adjusted net assets as of such calculation

date, multiplied by (ii) a fraction, the numerator of which is the number of days from and including the first day of such fiscal quarter

to but excluding the date upon which the management services agreement is terminated and the denominator of which is the number of days

in such fiscal quarter. ● “Total

offsetting management fees” will be equal to, as of any calculation date, fees paid

to our manager by the businesses that we acquire in the future under separate offsetting

management services agreements. 16 Transaction Services Agreements Pursuant to the management services agreement,

we have agreed that our manager may, at any time, enter into transaction services agreements with any of our businesses relating to the

performance by our manager of certain transaction-related services in connection with the acquisitions of target businesses by us or dispositions

of our property or assets. These services may include those customarily performed by a third-party investment banking firm or similar

financial advisor, which may or may not be similar to management services, in connection with the acquisition of target businesses by

us or our subsidiaries or disposition of subsidiaries or any of our property or assets or those of our subsidiaries. In connection with

providing transaction services, our manager will generally receive a fee equal to the sum of (i) 2.0% of the aggregate purchase price

of the target business up to and equal to $50 million, plus (ii) 1.5% of the aggregate purchase price of the target business in excess

of $50 million and up to and equal to $100 million, plus (iii) 1.0% of the aggregate purchase price over $100 million, subject to annual

review by our board of directors. The purchase price of a target business shall be defined as the aggregate amount of consideration, including

cash and the value of any shares issued by us on the date of acquisition, paid for the equity interests of such target business plus the

aggregate principal amount of any debt assumed by us of the target business on the date of acquisition or any similar formulation. The

other terms and conditions relating to the performance of transaction services will be established in accordance with market practice. Our manager may enter into transaction services

agreements with our subsidiaries and future subsidiaries, which agreements would be in the form prescribed by our management services

agreement. The services that our manager will provide to

our subsidiaries and future subsidiaries under the transaction services agreements will include the following services that would be

provided in connection with a specific transaction identified at the time that the transaction services agreement is entered int reviewing,

evaluating and otherwise familiarizing itself and its affiliates with the business, operations, properties, financial condition and prospects

of the future subsidiary and its target acquisition and preparing documentation describing the future subsidiary’s operations,

management, historical financial results, projected financial results and any other relevant matters and presenting such documentation

and making recommendations with respect thereto to certain of our manager’s affiliates. Any fees received by our manager pursuant to such

a transaction services agreement will be in addition to the management fee payable by us pursuant to the management services agreement

and will not offset the payment of such management fee. A transaction services agreement with any of our businesses may provide for the

reimbursement of costs and expenses incurred by our manager in connection with the acquisition of such businesses. Transaction services agreements will be reviewed, authorized and approved

by our board of directors on an annual basis. Reimbursement of Expenses We are responsible for paying costs and expenses relating to its business and operations. We agreed

to reimburse our manager during the term of the management services agreement for all costs and expenses that are incurred by our manager

or its affiliates on our behalf of, including any out-of-pocket costs and expenses incurred in connection with the performance of services

under the management services agreement, and all costs and expenses the reimbursement of which are specifically approved by our board

of directors. We will not be obligated or responsible for reimbursing or otherwise paying for any costs or expenses

relating to our manager’s overhead or any other costs and expenses relating to our manager’s conduct of its business and operations.

Also, we will not be obligated or responsible for reimbursing our manager for costs and expenses incurred by our manager in the identification,

evaluation, management, performance of due diligence on, negotiation and oversight of potential acquisitions of new businesses for which

we (or our manager on our behalf) fail to submit an indication of interest or letter of intent to pursue such acquisition, including costs

and expenses relating to travel, marketing and attendance of industry events and retention of outside service providers relating thereto.

In addition, we will not be obligated or responsible for reimbursing our manager for costs and expenses incurred by our manager in connection

with the identification, evaluation, management, performance of due diligence on, negotiating and oversight of an acquisition by us if

such acquisition is actually consummated and the business so acquired entered into a transaction services agreement with our manager providing

for the reimbursement of such costs and expenses by such business. In this respect, the costs and expenses associated with the pursuit

of add-on acquisitions may be reimbursed by any businesses so acquired pursuant to a transaction services agreement. All reimbursements will be reviewed and, in certain circumstances,

approved by our board of directors on an annual basis in connection with the preparation of year-end financial statements. 17 Termination Fee We will pay our manager a termination fee upon

termination of the management services agreement if such termination is based solely on a vote of our board of directors and our shareholders;

no other termination fee will be payable to our manager in connection with the termination of the management services agreement for any

other reason. The termination fee that is payable to our manager will be equal to the product of (i) two (2) multiplied by (ii) the sum

of the amount of the quarterly management fees calculated with respect to the four fiscal quarters immediately preceding the termination

date of the management services agreement. The termination fee will be payable in eight equal quarterly installments, with the first such

installment being paid on or within five (5) business days of the last day of the fiscal quarter in which the management services agreement

was terminated and each subsequent installment being paid on or within five (5) business days of the last day of each subsequent fiscal

quarter, until such time as the termination fee is paid in full to our manager. Our Manager as an Equity Holder Manager’s Profit Allocation Our manager owns 100% of our allocation shares,

which generally will entitle our manager to receive a 20% profit allocation as a form of preferred distribution. Upon the sale of a subsidiary,

our manager will be paid a profit allocation if the sum of (i) the excess of the gain on the sale of such subsidiary over a high-water

mark plus (ii) the subsidiary’s net income since its acquisition by us exceeds the 8% hurdle rate. The 8% hurdle rate is the product

of (i) a 2% rate per quarter, multiplied by (ii) the number of quarters such subsidiary was held by us, multiplied by (iii) the subsidiary’s

average share (determined based on gross assets, generally) of our consolidated net equity (determined according to GAAP with certain

adjustments). In certain circumstances, after a subsidiary has been held for at least 5 years, our manager may also trigger a profit allocation

with respect to such subsidiary (determined based solely on the subsidiary’s net income since its acquisition). The calculation

of the profit allocation and the rights of our manager, as the holder of the allocation shares, are governed by the operating agreement. Our board will have the opportunity to review

and approve the calculation of manager’s profit allocation when it becomes due and payable. Our manager will not receive a profit

allocation on an annual basis. Instead, our manager will be paid a profit allocation only upon the occurrence of one of the following

events, which we refer to collectively as the trigger events: ● the

sale of a material amount, as determined by our manager and reasonably consented to by a

majority of our board of directors, of the capital stock or assets of one of our subsidiaries

or a subsidiary of one of our subsidiaries, including a distribution of our ownership of

a subsidiary to our shareholders in a spin-off or similar transaction, which event we refer

to as a sale event; or ● at

the option of our manager, for the 30-day period following the fifth anniversary of the date

upon which we acquired a controlling interest in a business, which event we refer to as a

holding event. If our manager elects to forego declaring a holding event with respect to

such business during such period, then our manager may only declare a holding event with

respect to such business during the 30-day period following each anniversary of such fifth

anniversary date with respect to such business. Once declared, our manager may only declare

another holding event with respect to a business following the fifth anniversary of the calculation

date with respect to a previously declared holding event. We believe this payment timing, rather than a

method that provides for annual allocation payments, more accurately reflects the long-term performance of each of our businesses and

is consistent with our intent to hold, manage and grow our businesses over the long term. We refer generally to the obligation to make

this payment to our manager as the “profit allocation” and, specifically, to the amount of any particular profit allocation

as the “manager’s profit allocation.” Definitions used in, and an example of the calculation