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

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of profit allocation, are set forth in more detail below. The amount of our manager’s profit allocation
will be based on the extent to which the “total profit allocation amount” (as defined below) with respect to any business,
as of the last day of any fiscal quarter in which a trigger event occurs, which date we refer to as the “calculation date”,
exceeds the relevant hurdle amounts (as described below) with respect to such business, as of such calculation date. Our manager’s
profit allocation will be calculated by an administrator, which will be our manager so long as the management services agreement is in
effect, and such calculation will be subject to a review and approval process by our board of directors. For this purpose, “total
profit allocation amount” will be equal to, with respect to any business as of any calculation date, the sum o ● the
contribution-based profit (as described below) of such business as of such calculation date,
which will be calculated upon the occurrence of any trigger event with respect to such business;
plus ● the excess of our cumulative gains and losses (as described below)
over the high-water mark (as described below) as of such calculation date, which will only be calculated upon the occurrence of a sale
event with respect to such business, and not on a holding event (we generally expect this component to be the most significant component
in calculating total profit allocation amount). Specifically, manager’s profit allocation
will be calculated and paid as follows: ● manager’s
profit allocation will not be paid with respect to a trigger event relating to any business
if the total profit allocation amount, as of any calculation date, with respect to such business
does not exceed such business’ level 1 hurdle amount (based on an 8% annualized hurdle
rate, as described below), as of such calculation date; and 18 ● manager’s
profit allocation will be paid with respect to a trigger event relating to any business if
the total profit allocation amount, as of any calculation date, with respect to such business
exceeds such business’ level 1 hurdle amount, as of such calculation date. Our manager’s
profit allocation to be paid with respect to such calculation date will be equal to the sum
of the followin o 100%
of such business’ total profit allocation amount, as of such calculation date, with
respect to that portion of the total profit allocation amount that exceeds such business’
level 1 hurdle amount (but is less than or equal to such business’ level 2 hurdle amount
(which is based on a 10% annualized hurdle rate, as described below), in each case, as of
such calculation date. We refer to this portion of the total profit allocation amount as
the “catch-up.” The “catch-up” is intended to provide our manager
with an overall profit allocation of 20% of the business’ total profit allocation amount
until such business’ level 2 hurdle amount has been reached; plus o 20%
of the total profit allocation amount, as of such calculation date, that exceeds such business’
level 2 hurdle amount as of such calculation date; minus o the
high-water mark allocation, if any, as of such calculation date. The effect of deducting
the high-water mark allocation is to take into account profit allocations our manager has
already received in respect of past gains attributable to previous sale events. The administrator will calculate our manager’s
profit allocation on or promptly following the relevant calculation date, subject to a “true-up” calculation upon availability
of audited or unaudited consolidated financial statements, as the case may be, to the extent not available on such calculation date. Any
adjustment necessitated by the true-up calculation will be made in connection with the next calculation of manager’s profit allocation.
Because of the length of time that may pass between trigger events, there may be a significant delay in our ability to realize the benefit,
if any, of a true-up of our manager’s profit allocation. Once calculated, the administrator will submit
the calculation of our manager’s profit allocation, as adjusted pursuant to any true-up, to our board of directors for its review
and approval. The board of directors will have ten business days to review and approve the calculation, which approval shall be automatic
absent disapproval by the board of directors. Our manager’s profit allocation will be paid ten business days after such approval. If the board of directors disapproves of the administrator’s
calculation of manager’s profit allocation, the calculation and payment of manager’s profit allocation will be subject to
a dispute resolution process, which may result in our manager’s profit allocation being determined, at our cost and expense, by
two independent accounting firms. Any determination by such independent accounting firms will be conclusive and binding on us and our
manager. We will also pay a tax distribution to our manager
if our manager is allocated taxable income by us but does not realize distributions from us at least equal to the taxes payable by our
manager resulting from allocations of taxable income. Any such tax distributions will be paid in a similar manner as profit allocations
are paid. For any fiscal quarter in which a trigger event
occurs with respect to more than one business, the calculation of our manager’s profit allocation, including the components thereof,
will be made with respect to each business in the order in which controlling interests in such businesses were acquired or obtained by
us and the resulting amounts shall be aggregated to determine the total amount of manager’s profit allocation. If controlling interests
in two or more businesses were acquired at the same time and such businesses give rise to a calculation of manager’s profit allocation
during the same fiscal quarter, then manager’s profit allocation will be further calculated separately for each such business in
the order in which such businesses were sold. 19 The profit allocations and tax distributions will
be paid prior to the payment of distributions to our shareholders. If we do not have sufficient liquid assets to pay the profit allocations
or tax distributions when due, we may be required to liquidate assets or incur debt in order to pay such profit allocation. Our manager
will have the right to elect to defer the payment of our manager’s profit allocation due on any payment date. Once deferred, our
manager may demand payment thereof upon 20 business days’ prior written notice. Termination of the management services agreement,
by any means, will not affect our manager’s rights with respect to the allocation shares that it owns, including its right to receive
profit allocations, unless our manager exercises its put right to sell such allocation shares to us. Example of Calculation of Manager’s
Profit Allocation Our manager will receive a profit allocation
at the end of the fiscal quarter in which a trigger event occurs, as follows (all dollar amounts are in millions): Assumptions Year 1: Acquisition of Company A Acquisition of Company B Year 4 Company A (or assets thereof) sold
for $25 capital gain (as defined below) over its net book value of assets at time of sale, which is a qualifying trigger event Company A’s average allocated
share of our consolidated net equity over its ownership is $50 Company A’s holding period in
quarters is 12 (assuming that Company A is acquired on the first day of the year) Company A’s contribution-based
profit since acquisition is $5 Year 6: Company B’s contribution-based
profit since acquisition is $7 Company B’s average allocated
share of our consolidated net equity over its ownership is $25 Company B’s holding period in
quarters is 20 Company B’s cumulative gains
and losses are $20 Manager elects to have holding period
measured for purposes of profit allocation for Company B Profit Allocation Calculati Year 4 A, due to sale Year 6 B, due to 5 year hold 1 Contribution-based profit since acquisition for respective subsidiary $ 5 $ 7 2 Gain/ Loss on sale of company 25 0 3 Cumulative gains and losses 25 20 4 High-water mark prior to transaction 0 20 5 Total Profit Allocation Amount (Line 1 + Line 3) 30 27 6 Business’ holding period in quarters since ownership or last measurement due to holding event 12 20 7 Business’ average allocated share of consolidated net equity 50 25 8 Business’ level 1 hurdle amount (2.00% * Line 6 * Line 7) 12 10 9 Business’ excess over level 1 hurdle amount (Line 5 – Line 8) 18 17 10 Business’ level 2 hurdle amount (125% * Line 8) 15 12.5 11 Allocated to manager as “catch-up” (Line 10 – Line 8) 3 2.5 12 Excess over level 2 hurdle amount (Line 9 – Line 11) 15 14.5 13 Allocated to manager from excess over level 2 hurdle amount (20% * Line 12) 3 2.9 14 Cumulative allocation to manager (Line 11 + Line 13) 6 5.4 15 High-water mark allocation (20% * Line 4) 0 4 16 Manager’s Profit Allocation for Current Period (Line 14 – Line 15,> 0) $ 6 $ 1.4 20 For purposes of calculating profit allocati ● An
entity’s “ adjusted net assets ” will be equal to, as of any date,
the sum of (i) such entity’s consolidated total assets (as determined in accordance
with GAAP) as of such date, plus (ii) the absolute amount of such entity’s consolidated
accumulated amortization of intangibles (as determined in accordance with GAAP) as of such
date, minus (iii) the absolute amount of such entity’s adjusted total liabilities as
of such date. ● An
entity’s “ adjusted total liabilities ” will be equal to, as of any
date, such entity’s consolidated total liabilities (as determined in accordance with
GAAP) as of such date after excluding the effect of any outstanding third-party indebtedness
of such entity. ● A business’ “ allocated share of our overhead ”
will be equal to, with respect to any measurement period as of any calculation date, the aggregate amount of such business’ quarterly
share of our overhead for each fiscal quarter ending during such measurement period. ● A
business’ “ average allocated share of our consolidated equity ” will
be equal to, with respect to any measurement period as of any calculation date, the average
(i.e., arithmetic mean) of a business’ quarterly allocated share of our consolidated
equity for each fiscal quarter ending during such measurement period. ● “ Capital gains ” (i) means, with respect to any entity,
capital gains (as determined in accordance with GAAP) that are calculated with respect to the sale of capital stock or assets of such
entity and which sale gave rise to a sale event and the calculation of profit allocation and (ii) will be equal to the amount, adjusted
for minority interests, by which (x) the net sales price of such capital stock or assets, as the case may be, exceeded (y) the net book
value (as determined in accordance with GAAP) of such capital stock or assets, as the case may be, at the time of such sale, as reflected
on our consolidated balance sheet prepared in accordance with GAAP; provided, that such amount shall not be less than zero. ● “ Capital
losses ” (i) means, with respect to any entity, capital losses (as determined in
accordance with GAAP) that are calculated with respect to the sale of capital stock or assets
of such entity and which sale gave rise to a sale event and the calculation of profit allocation
and (ii) will be equal to the amount, adjusted for minority interests, by which (x) the net
book value (as determined in accordance with GAAP) of such capital stock or assets, as the

of profit allocation, are set forth in more detail below. The amount of our manager’s profit allocation

will be based on the extent to which the “total profit allocation amount” (as defined below) with respect to any business,

as of the last day of any fiscal quarter in which a trigger event occurs, which date we refer to as the “calculation date”,

exceeds the relevant hurdle amounts (as described below) with respect to such business, as of such calculation date. Our manager’s

profit allocation will be calculated by an administrator, which will be our manager so long as the management services agreement is in

effect, and such calculation will be subject to a review and approval process by our board of directors. For this purpose, “total

profit allocation amount” will be equal to, with respect to any business as of any calculation date, the sum o ● the

contribution-based profit (as described below) of such business as of such calculation date,

which will be calculated upon the occurrence of any trigger event with respect to such business;

plus ● the excess of our cumulative gains and losses (as described below)

over the high-water mark (as described below) as of such calculation date, which will only be calculated upon the occurrence of a sale

event with respect to such business, and not on a holding event (we generally expect this component to be the most significant component

in calculating total profit allocation amount). Specifically, manager’s profit allocation

will be calculated and paid as follows: ● manager’s

profit allocation will not be paid with respect to a trigger event relating to any business

if the total profit allocation amount, as of any calculation date, with respect to such business

does not exceed such business’ level 1 hurdle amount (based on an 8% annualized hurdle

rate, as described below), as of such calculation date; and 18 ● manager’s

profit allocation will be paid with respect to a trigger event relating to any business if

the total profit allocation amount, as of any calculation date, with respect to such business

exceeds such business’ level 1 hurdle amount, as of such calculation date. Our manager’s

profit allocation to be paid with respect to such calculation date will be equal to the sum

of the followin o 100%

of such business’ total profit allocation amount, as of such calculation date, with

respect to that portion of the total profit allocation amount that exceeds such business’

level 1 hurdle amount (but is less than or equal to such business’ level 2 hurdle amount

(which is based on a 10% annualized hurdle rate, as described below), in each case, as of

such calculation date. We refer to this portion of the total profit allocation amount as

the “catch-up.” The “catch-up” is intended to provide our manager

with an overall profit allocation of 20% of the business’ total profit allocation amount

until such business’ level 2 hurdle amount has been reached; plus o 20%

of the total profit allocation amount, as of such calculation date, that exceeds such business’

level 2 hurdle amount as of such calculation date; minus o the

high-water mark allocation, if any, as of such calculation date. The effect of deducting

the high-water mark allocation is to take into account profit allocations our manager has

already received in respect of past gains attributable to previous sale events. The administrator will calculate our manager’s

profit allocation on or promptly following the relevant calculation date, subject to a “true-up” calculation upon availability

of audited or unaudited consolidated financial statements, as the case may be, to the extent not available on such calculation date. Any

adjustment necessitated by the true-up calculation will be made in connection with the next calculation of manager’s profit allocation.

Because of the length of time that may pass between trigger events, there may be a significant delay in our ability to realize the benefit,

if any, of a true-up of our manager’s profit allocation. Once calculated, the administrator will submit

the calculation of our manager’s profit allocation, as adjusted pursuant to any true-up, to our board of directors for its review

and approval. The board of directors will have ten business days to review and approve the calculation, which approval shall be automatic

absent disapproval by the board of directors. Our manager’s profit allocation will be paid ten business days after such approval. If the board of directors disapproves of the administrator’s

calculation of manager’s profit allocation, the calculation and payment of manager’s profit allocation will be subject to

a dispute resolution process, which may result in our manager’s profit allocation being determined, at our cost and expense, by

two independent accounting firms. Any determination by such independent accounting firms will be conclusive and binding on us and our

manager. We will also pay a tax distribution to our manager

if our manager is allocated taxable income by us but does not realize distributions from us at least equal to the taxes payable by our

manager resulting from allocations of taxable income. Any such tax distributions will be paid in a similar manner as profit allocations

are paid. For any fiscal quarter in which a trigger event

occurs with respect to more than one business, the calculation of our manager’s profit allocation, including the components thereof,

will be made with respect to each business in the order in which controlling interests in such businesses were acquired or obtained by

us and the resulting amounts shall be aggregated to determine the total amount of manager’s profit allocation. If controlling interests

in two or more businesses were acquired at the same time and such businesses give rise to a calculation of manager’s profit allocation

during the same fiscal quarter, then manager’s profit allocation will be further calculated separately for each such business in

the order in which such businesses were sold. 19 The profit allocations and tax distributions will

be paid prior to the payment of distributions to our shareholders. If we do not have sufficient liquid assets to pay the profit allocations

or tax distributions when due, we may be required to liquidate assets or incur debt in order to pay such profit allocation. Our manager

will have the right to elect to defer the payment of our manager’s profit allocation due on any payment date. Once deferred, our

manager may demand payment thereof upon 20 business days’ prior written notice. Termination of the management services agreement,

by any means, will not affect our manager’s rights with respect to the allocation shares that it owns, including its right to receive

profit allocations, unless our manager exercises its put right to sell such allocation shares to us. Example of Calculation of Manager’s

Profit Allocation Our manager will receive a profit allocation

at the end of the fiscal quarter in which a trigger event occurs, as follows (all dollar amounts are in millions): Assumptions Year 1: Acquisition of Company A Acquisition of Company B Year 4 Company A (or assets thereof) sold

for $25 capital gain (as defined below) over its net book value of assets at time of sale, which is a qualifying trigger event Company A’s average allocated

share of our consolidated net equity over its ownership is $50 Company A’s holding period in

quarters is 12 (assuming that Company A is acquired on the first day of the year) Company A’s contribution-based

profit since acquisition is $5 Year 6: Company B’s contribution-based

profit since acquisition is $7 Company B’s average allocated

share of our consolidated net equity over its ownership is $25 Company B’s holding period in

quarters is 20 Company B’s cumulative gains

and losses are $20 Manager elects to have holding period

measured for purposes of profit allocation for Company B Profit Allocation Calculati Year 4 A, due to sale Year 6 B, due to 5 year hold 1 Contribution-based profit since acquisition for respective subsidiary $ 5 $ 7 2 Gain/ Loss on sale of company 25 0 3 Cumulative gains and losses 25 20 4 High-water mark prior to transaction 0 20 5 Total Profit Allocation Amount (Line 1 + Line 3) 30 27 6 Business’ holding period in quarters since ownership or last measurement due to holding event 12 20 7 Business’ average allocated share of consolidated net equity 50 25 8 Business’ level 1 hurdle amount (2.00% * Line 6 * Line 7) 12 10 9 Business’ excess over level 1 hurdle amount (Line 5 – Line 8) 18 17 10 Business’ level 2 hurdle amount (125% * Line 8) 15 12.5 11 Allocated to manager as “catch-up” (Line 10 – Line 8) 3 2.5 12 Excess over level 2 hurdle amount (Line 9 – Line 11) 15 14.5 13 Allocated to manager from excess over level 2 hurdle amount (20% * Line 12) 3 2.9 14 Cumulative allocation to manager (Line 11 + Line 13) 6 5.4 15 High-water mark allocation (20% * Line 4) 0 4 16 Manager’s Profit Allocation for Current Period (Line 14 – Line 15,> 0) $ 6 $ 1.4 20 For purposes of calculating profit allocati ● An

entity’s “ adjusted net assets ” will be equal to, as of any date,

the sum of (i) such entity’s consolidated total assets (as determined in accordance

with GAAP) as of such date, plus (ii) the absolute amount of such entity’s consolidated

accumulated amortization of intangibles (as determined in accordance with GAAP) as of such

date, minus (iii) the absolute amount of such entity’s adjusted total liabilities as

of such date. ● An

entity’s “ adjusted total liabilities ” will be equal to, as of any

date, such entity’s consolidated total liabilities (as determined in accordance with

GAAP) as of such date after excluding the effect of any outstanding third-party indebtedness

of such entity. ● A business’ “ allocated share of our overhead ”

will be equal to, with respect to any measurement period as of any calculation date, the aggregate amount of such business’ quarterly

share of our overhead for each fiscal quarter ending during such measurement period. ● A

business’ “ average allocated share of our consolidated equity ” will

be equal to, with respect to any measurement period as of any calculation date, the average

(i.e., arithmetic mean) of a business’ quarterly allocated share of our consolidated

equity for each fiscal quarter ending during such measurement period. ● “ Capital gains ” (i) means, with respect to any entity,

capital gains (as determined in accordance with GAAP) that are calculated with respect to the sale of capital stock or assets of such

entity and which sale gave rise to a sale event and the calculation of profit allocation and (ii) will be equal to the amount, adjusted

for minority interests, by which (x) the net sales price of such capital stock or assets, as the case may be, exceeded (y) the net book

value (as determined in accordance with GAAP) of such capital stock or assets, as the case may be, at the time of such sale, as reflected

on our consolidated balance sheet prepared in accordance with GAAP; provided, that such amount shall not be less than zero. ● “ Capital

losses ” (i) means, with respect to any entity, capital losses (as determined in

accordance with GAAP) that are calculated with respect to the sale of capital stock or assets

of such entity and which sale gave rise to a sale event and the calculation of profit allocation

and (ii) will be equal to the amount, adjusted for minority interests, by which (x) the net

book value (as determined in accordance with GAAP) of such capital stock or assets, as the