profits interests, is set forth opposite such Owned Units under the heading Distribution Threshold and is subject to the principles set forth opposite such Owned Units under the heading Catch-Up Principles.
1.2 The Distribution Threshold of the Owned Units, as applicable, may be adjusted, prior to or in connection with (a) an IPO ( as defined in the EOC Parent LLC Agreement), or (b) a merger or other transaction following which EOC Parent or an affiliate of EOC Parent has publicly traded securities, by the EOC Managing Member, in good faith, to account for a Restructuring (as defined below), a Recapitalization (as defined below), capital contributions, distributions or other similar events; provided, that in the case of adjustments to the Distribution Threshold, such adjustment shall only be by the amount necessary so that the Owned Units satisfy the requirements for a profits interest as set forth in Internal Revenue Service (IRS) Revenue Procedures 93-27 and 2001-43, or any future IRS guidance or other authority that supplements or supersedes the foregoing IRS Revenue Procedures.
1.3 Grantee acknowledges and agrees that (a) EOC Parent, Iris II, Iris IV and WME Holdco may be recapitalized, reorganized, liquidated, merged into or consolidated or combined with another entity, or otherwise restructured in connection with an IPO (a Restructuring) and, in connection with any Restructuring, EOC Parent, Iris II, Iris IV and WME Holdco are entitled to, in their good faith discretion, unilaterally cause the Owned Units to be converted, recapitalized, reclassified, redeemed or otherwise exchanged and the terms and conditions of the Owned Units to be adjusted (a Recapitalization), in each case, without Grantees consent, and (b) (i) any rights and obligations of Grantee with respect to Grantees equity interests in Iris II, Iris IV and WME Holdco immediately prior to a Restructuring and/or Recapitalization shall apply equally to the equity interests received by Grantee in connection with a Restructuring and/or Recapitalization and (ii) all references to Iris II, Iris IV and WME Holdco (and any governing bodies and organizational documents thereof) shall be deemed to refer to the applicable successors thereto (and any governing bodies and organizational documents thereof) following a Restructuring and/or Recapitalization and all references to equity interests in Iris II, Iris IV and WME Holdco herein shall be deemed to refer to the corresponding equity interests held by Grantee immediately following a Restructuring and/or Recapitalization. Without limiting the foregoing, Grantee, EOC Parent, EGH, Iris II, Iris IV and WME Holdco agree that the Owned Units that are catch-up profits interests that, based on the total equity value of EOC Parent implied by the offering price of a share of common stock of EGH to the public in an IPO, will receive the same economics that they would have received if such Owned Units had a Distribution Threshold equal to the applicable catch-up Distribution Threshold of such Owned Units set forth on Schedule B, may be converted, recapitalized, reclassified, redeemed or otherwise exchanged into direct or indirect interests in Class A Common Units (as defined in the EOC Parent LLC Agreement) of EOC Parent in connection with a Restructuring and/or Recapitalization.
1.4 Grantee acknowledges and agrees that, on and after the Effective Date, the Grantee will be subject to the Restrictive Covenants (as defined in and set forth on Schedule E attached hereto).