SEC Filing Document

Company: ERock, Inc.
Ticker: 
CIK: 2110029
Filing Type: S-1
Document Type: S-1
Date Filed: 2026-05-15
Accession Number: 0001193125-26-227199
Exchange: 
SIC Code: 3620
SIC Description: Electrical Industrial Apparatus
URL: https://www.sec.gov/Archives/edgar/data/2110029/000119312526227199/d12401ds1.htm

Chunk 80 of 119
Word Count: 1333
Character Count: 8061

Document Content:

(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, local and non-U.S. 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 membership interests in ER Holdings (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 may be substantial. For the sake of
illustration, assuming all outstanding membership interests in ER Holdings held by TRA Beneficiaries are exchanged for shares of Class A Common Stock immediately after this offering, the estimated tax benefits 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) that the Continuing Profits Interest Unitholders converted all of their Class M
Units into Class B Units of equivalent value at the time of the conversion immediately after the IPO, and the resulting Class B Units were redeemed or exchanged in accordance with clause (i), (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 realize on a current basis the increased depreciation, amortization and other tax benefits that are the subject
of the Tax Receivable Agreement. Additionally, if we were to elect to terminate the Tax Receivable Agreement immediately after this offering, based on an initial public offering price of $     per share of our Class A Common
Stock, we estimate that we would be required to pay approximately $    million in the aggregate under the Tax Receivable Agreement. This early termination payment is equal to the present value of all payments that would be
required to be paid by ERock under the Tax Receivable Agreement, and is determined by taking into account certain assumptions and using a discount rate equal to the lesser of (a) 6.5% and (b) the Secured Overnight Financing Rate, as reported by the
Wall Street Journal (SOFR) plus 400 basis points.

Table of Contents

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.

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.

Payments under the Tax Receivable Agreement will be based on the tax reporting positions that we
determine. Although we are not aware of any material issue that would cause the IRS to challenge a tax basis increase, we will not, in the event of a successful challenge, be reimbursed for any payments previously made under the Tax Receivable
Agreement (although we would reduce future amounts otherwise payable to a TRA Beneficiary under the Tax Receivable Agreement to the extent such TRA Beneficiary has received excess payments). No assurance can be given that the IRS will agree with our
tax reporting positions, including the allocation of value among our assets. As a result, in certain circumstances, payments could be made under the Tax Receivable Agreement significantly in excess of the benefit that we actually realize. We will
not be able to recoup those payments, other than through a reduction of future payments under the Tax Receivable Agreement (if any), which could adversely affect our financial condition and liquidity.

Generally, holders of rights under the Tax Receivable Agreement (including the right to receive payments) may not transfer
their rights to another person without our written consent, except that all such rights may be transferred to another person to the extent that the corresponding membership interests of ER Holdings are transferred in accordance with the A&R
LLCA.

Limited Liability Company Agreement

In connection with the IPO and the Reorganization, the members of ER Holdings will amend and restate the Limited Liability
Company Agreement of ER Holdings. In our capacity as the managing member (or as the owner of the managing member), we will control all of ER Holdings’ business and affairs. Following the IPO and the Reorganization, we will hold all of the
Class A Units of ER Holdings. Holders of Class A Units generally will be entitled to one vote per unit with respect to all matters as to which members are entitled to vote under the

Table of Contents

A&R LLCA. No person will have any voting rights in ER Holdings on account of the Class B Units or Class M Units, except for the right to approve amendments to the A&R LLCA that
adversely affect the rights of holders of Class B Units or Class M Units, respectively. Each Class A Unit and Class B Unit will have the same economic rights per interest. Class M Units represent interests in the profits of ER
Holdings in excess of a certain “Threshold Amount” specified for each applicable Class M Unit that acts similarly to a strike price for a stock option in that the holder will only realize value in excess of such amount.