SEC Filing Document

Company: ERock, Inc.
Ticker: 
CIK: 2110029
Filing Type: DRS
Document Type: DRS
Date Filed: 2026-02-17
Accession Number: 0001193125-26-054926
Exchange: 
SIC Code: 3620
SIC Description: Electrical Industrial Apparatus
URL: https://www.sec.gov/Archives/edgar/data/2110029/000119312526054926/filename1.htm

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not taxable for any reason, increased tax deductions will not be available; • the amount, timing and character of our income—we expect that the Tax Receivable Agreement will require us to pay 85% of the net cash tax savings as and when deemed realized. If we do not have taxable income during a taxable year, we generally will not be required (absent a circumstance requiring an early termination payment) to make payments under the Tax Receivable Agreement for that taxable year because no benefit will have been realized. However, any tax benefits that do not result in net cash tax savings in a given tax year may generate tax attributes that may be used to generate net cash tax savings in previous or future taxable years. The use of any such tax attributes will generate net cash tax savings that will result in payments under the Tax Receivable Agreement; and

• the applicable tax rates—U.S. federal, state and local tax rates in effect at the time that we are
deemed to realize the relevant tax benefits.

In addition, the amount of certain favorable tax
attributes we will acquire in the Blocker Mergers (such as net operating losses), the amount of each Continuing Equity Unitholder’s tax basis in its ER Holdings units at the time of the exchange, the depreciation and amortization periods that
apply to the increases in tax basis, the timing and amount of any earlier payments that we may have made under the Tax Receivable Agreement, and the portion of our payments under the Tax Receivable Agreement that constitute imputed interest or give
rise to depreciable or amortizable tax basis are also relevant factors.

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The Tax Receivable Agreement further provides that, upon certain mergers,
asset sales, or other forms of business combination or certain other changes of control, our or our successor’s obligations with respect to tax benefits would be based on certain assumptions, including that we or our successor would have
sufficient taxable income to fully utilize the benefits arising from the increased tax deductions and tax basis and other benefits covered by the Tax Receivable Agreement. As a result, upon a change of control, we could be required to make payments
under the Tax Receivable Agreement that are greater than or less than the specified percentage of our actual cash tax savings, which could negatively impact our liquidity.

In addition, we will have the right to terminate the Tax Receivable Agreement, in whole or in part, at any time. The Tax
Receivable Agreement will provide that if (i) we exercise our right to early termination of the Tax Receivable Agreement in whole (that is, with respect to all benefits due to all TRA Beneficiaries under the Tax Receivable Agreement) or in part
(that is, with respect to some benefits due to all TRA Beneficiaries under the Tax Receivable Agreement), (ii) the Tax Receivable Agreement is rejected in certain bankruptcy proceedings, (iii) we fail (subject to certain exceptions) to make a
payment under the Tax Receivable Agreement within 180 days after the due date, or (iv) we materially breach our obligations under the Tax Receivable Agreement, we will be obligated to make an early termination payment to the TRA
Beneficiaries under the Tax Receivable Agreement equal to the present value of all payments that would be required to be paid by us under the Tax Receivable Agreement. The amount of such payments will be determined on the basis of certain
assumptions in the Tax Receivable Agreement, including (i) the assumption that we would have enough taxable income to fully utilize the tax benefit resulting from the tax assets which are the subject of the Tax Receivable Agreement,
(ii) the assumption that any item of loss deduction or credit generated by a basis adjustment or imputed interest arising in a taxable year preceding the taxable year that includes an early termination will be used by us ratably from such
taxable year through the earlier of (x) the scheduled expiration of such tax item or (y) 15 years; (iii) the assumption that any non-amortizable assets are deemed to be disposed of in a fully taxable
transaction on the fifteenth anniversary of the earlier of the basis adjustment and the early termination date; (iv) the assumption that U.S. federal, state and local tax rates will be the same as in effect on the early termination date, unless
scheduled to change; and (v) the assumption that any exchangeable Class B Units (other than those held by us) outstanding on the termination date are deemed to be exchanged for an amount equal to the market value of the corresponding number of
shares of Class A common stock on the termination date. The amount of the early termination payment is determined by discounting the present value of all payments that would be required to be paid by us under the Tax Receivable Agreement at a
rate equal to     .

The payments that we will be required to make under the Tax Receivable
Agreement are expected to be substantial. If all of the Continuing Equity Unitholders were to exchange their Class B Units in ER Holdings, the estimated tax benefits to us subject to the Tax Receivable Agreement would be approximately
$     and the related undiscounted payment to the TRA Beneficiaries equal to 85% of the benefit would be approximately $    , assuming (i) that the Continuing Equity Unitholders redeemed or
exchanged all of their Class B Units immediately after the consummation of the IPO at $     per share of our Class A common stock, (ii) no material changes in relevant tax law, (iii) a constant combined
effective income tax rate of  %, and (iv) that we have sufficient taxable income in each year to realize on a current basis the increased depreciation, amortization and other tax benefits that are the subject of the Tax Receivable
Agreement.

The actual future payments to the TRA Beneficiaries will vary based on the factors discussed above, and
estimating the amount of payments that may be made under each Tax Receivable Agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors and future events. See “Risk
Factors—Risks Related to Our Corporate Structure, Our Class A Common Stock and this Offering.”

Decisions made in the course of running our business, such as with respect to mergers and other forms of business combinations
that constitute changes in control, may influence the timing and amount of payments we make under the Tax Receivable Agreement in a manner that does not correspond to our use of the corresponding tax benefits. In these situations, our obligations
under the Tax Receivable Agreement could have a substantial negative effect on our liquidity and could have the effect of delaying, deferring, or preventing certain mergers, asset sales, other forms of business combinations or other changes in
control.

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Payments generally are due under the Tax Receivable Agreement within a
specified period of time following the filing of our tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of      from the due
date (without extensions) of such tax return. Late payments generally accrue interest at a rate of      commencing from the date on which such payment was due and payable. Because of our structure, our ability to make
payments under the Tax Receivable Agreement is dependent on the ability of ER Holdings to make distributions to us. The ability of ER Holdings to make such distributions will be subject to, among other things, restrictions of law or in the
agreements governing our debt. If we are unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid.

Additionally, we shall be required to indemnify and reimburse the “TRA Representative” who will represent certain
TRA Beneficiaries under the Tax Receivable Agreement, for all costs and expenses, including legal and accounting fees and any other costs arising from claims in connection with the TRA Representative’s duties under the Tax Receivable
Agreement, provided, the TRA Representative has acted reasonably and in good faith in incurring such expenses and costs. It is expected that     , in his capacity as     , will serve as the TRA
Representative.