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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favorable tax attributes (such as net operating losses attributable to pre-merger tax periods) we acquired in the Blocker Mergers and (iii) any payments we make to the TRA Beneficiaries under the Tax Receivable Agreement (including tax benefits related to imputed interest). We will retain the benefit of the remaining 15% of these net cash tax savings. The term of the Tax Receivable Agreement commenced upon the completion of the IPO and will continue until all tax benefits that are subject to the Tax Receivable Agreement have been used or have expired, or the Tax Receivable Agreement is terminated in accordance with its terms. The payments under the Tax Receivable Agreement are not conditioned upon continued ownership of us by the TRA Beneficiaries. In addition, payments we make under the Tax Receivable Agreement will be increased by any interest accrued from the due date (without extensions) of the corresponding tax return.

The actual tax benefit, as well as the amount and timing of any
payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the price of our common stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and
timing of the use of tax attributes; the amount, timing and character of our income; the U.S. federal, state and local tax rates then applicable; 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.
Because of these factors, estimating the amount and timing of payments that may be made under the Tax Receivable Agreement is by its nature imprecise. We anticipate that the payments that we will be required to make to the beneficiaries under the
Tax Receivable Agreement will be substantial. We expect to receive distributions from ER Holdings in order to make any required payments under the Tax Receivable Agreement. However, we may need to incur debt to finance payments under the Tax
Receivable Agreement to the extent such distributions or our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. There may be a material negative effect on our
financial condition and liquidity if, as described below, the payments under the Tax Receivable Agreement exceed the actual benefits we receive in respect of the tax attributes subject to the Tax Receivable Agreement and/or distributions to us by ER
Holdings are not sufficient to permit us to make payments under the Tax Receivable Agreement.

For the sake of
illustration, assuming all outstanding Class B Units are exchanged for shares of Class A Common Stock, 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) exchanges occurred on the same day, (ii) a share price of $
per share of Class A common stock, (iii) no material changes in relevant tax law, (iv) a constant combined effective income tax rate of  % and (v) that we have sufficient taxable income in each year to use on a current
basis the increased depreciation, amortization and other tax benefits that are the subject of the Tax Receivable Agreement.

result of the Tax Receivable Agreement, interests of the Continuing Equity Unitholders may conflict with those of other holders of our Class A common stock including connection with certain potential future transactions.

As discussed above, our organizational “UP-C” structure, including the Tax
Receivable Agreement, confers certain benefits upon certain of the Continuing Equity Unitholders. Certain of the Continuing Equity Unitholders may receive payments from us under the Tax Receivable Agreement upon any redemption or exchange of their
ER Holdings units, including in connection with a voluntary termination of the Tax Receivable Agreement or following a change of control transaction. As a result, the interests of such Continuing Equity Unitholders may conflict with the interests of
holders of our Class A common stock. For example, in connection with a change of

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control transaction, certain valuation assumptions in the Tax Receivable Agreement would apply, potentially increasing the amount of, or accelerating the timing of, payments that otherwise would
be made to the TRA Beneficiaries pursuant to the Tax Receivable Agreement. The prospect of receiving enhanced Tax Receivable Agreement payments could impact the Continuing Equity Unitholders’ support for a change of control transaction and/or
their view of the appropriateness of the consideration received for our Class A common stock. Similarly, the cost associated with such enhanced payments may influence a prospective buyer’s valuation of our shares. In addition, the
structuring of future transactions may take into consideration tax or other considerations of such Continuing Equity Unitholders even in situations where no similar considerations are relevant to us. See “Certain Relationships and Related
Party Transactions—Tax Receivable Agreement” for a discussion of the Tax Receivable Agreement and the related likely benefits to be realized by us and certain Continuing Equity Unitholders.

The application of certain valuation assumptions under the Tax Receivable Agreement in the case of certain changes of control or other
events may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our Class A common stock.

In the event of certain changes of control, certain material breaches of the Tax Receivable Agreement by us, or an insolvency
event, the calculation of certain future payments made under the Tax Receivable Agreement will use certain valuation assumptions, including that (i) in the case of a change of control, any exchangeable Class B Units of ER Holdings (other
than those held by us) outstanding on the date the change of control becomes effective are deemed to be exchanged for an amount equal to the market value of the corresponding number of shares of common stock on the date the change of control becomes
effective and (ii) we will have sufficient taxable income to fully use (A) the tax attributes covered by the Tax Receivable Agreement and (B) any remaining net operating losses subject to the Tax Receivable Agreement on a straight
line basis over the shorter of the statutory expiration period for such net operating losses or the 15-year period after the change of control or other relevant event. Such payments may significantly exceed the actual benefits we realize in respect
of the tax attributes subject to the Tax Receivable Agreement. We expect that the payments that we may make under the Tax Receivable Agreement following a change of control will be substantial and may be in excess of 85% of our actual cash tax
benefits. As a result, the assumptions adopted under the Tax Receivable Agreement in the case of a change of control may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our
Class A common stock in a change of control transaction.

In certain cases, payments under the Tax Receivable Agreement to the
TRA Beneficiaries may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement.

Under the Tax Receivable Agreement, if we exercise our right to terminate the Tax Receivable Agreement early, or we breach any
of our material obligations under the Tax Receivable Agreement, our obligations under the Tax Receivable Agreement to make payments would be accelerated and based on certain assumptions, including an assumption that we would have sufficient taxable
income to fully use all potential future tax benefits that are subject to the Tax Receivable Agreement. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

As a result, the amount we are required to pay under the Tax Receivable Agreement may significantly exceed 85% of the actual
cash tax benefits that we realize in respect of the tax attributes subject to the Tax Receivable Agreement or that are prior to the actual realization, if any, of such future tax benefits.

In certain circumstances, ER Holdings will be required to make distributions to us and the Continuing Equity Unitholders, and the
distributions that ER Holdings will be required to make may be substantial.

ER Holdings is expected to continue to
be treated as a partnership for U.S. federal income tax purposes and, as such, generally is not subject to U.S. federal income tax under existing law. Instead, taxable income will be allocated to its members, including us.

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