Tax Receivable Agreement
In connection with the Business Combination, we entered into a tax receivable agreement (the “Tax Receivable Agreement” or the
“TRA”) with certain of our pre-Business Combination owners (the “TRA Parties”), in substantially the form attached as Exhibit 10.2 to
the Company’s Current Report on Form 8-K, filed with the SEC on July 12, 2021. The Tax Receivable Agreement provides for the
payment by the Company to such TRA Parties of 85% of the benefits, if any, that the Company is deemed to realize (calculated using
certain assumptions) as a result of (i) the Company’s direct and indirect allocable share of existing tax basis acquired in the Business
Combination, (ii) increases in the Company’s allocable share of existing tax basis and tax basis adjustments that will increase the tax
basis of the tangible and intangible assets of Alight Holdings as a result of the Business Combination and as a result of sales or
exchanges of the limited liability company interests of Alight Holdings (the “Alight Holdings Units”) for shares of Class A common stock
after the Business Combination and (iii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax
benefits attributable to payments under the Tax Receivable Agreement. These increases in existing tax basis and tax basis adjustments
generated over time may increase (for tax purposes) depreciation and amortization deductions and, therefore, may reduce the amount
of tax that the Company would otherwise be required to pay in the future, although the Internal Revenue Service may challenge all or
part of the validity of that tax basis, and a court could sustain such a challenge. Actual tax benefits realized by the Company may differ
from tax benefits calculated under the Tax Receivable Agreement as a result of the use of certain assumptions in the Tax Receivable
Agreement, including the use of an assumed weighted-average state and local income tax rate to calculate tax benefits. The payment
obligation under the Tax Receivable Agreement is an obligation of the Company and not of Alight Holdings. While the amount of existing
tax basis, the anticipated tax basis adjustments and the actual amount and utilization of tax attributes, 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 timing of exchanges
of Alight Holdings Units for shares of Class A common stock, the applicable tax rate, the price of shares of our Class A common stock at
the time of exchanges, the extent to which such exchanges are taxable and the amount and timing of our income, we expect that as a
result of the size of the transfers and increases in the tax basis of the tangible and intangible assets of Alight Holdings and our possible
utilization of tax attributes, including existing tax basis acquired at the time of the Business Combination, the payments that the
Company may make under the Tax Receivable Agreement may be substantial. The payments under the Tax Receivable Agreement are
not conditioned on the exchanging holders of Alight Holdings Units or other TRA Parties continuing to hold ownership interests in the
Company or Alight Holdings. To the extent payments are due to the TRA Party Representative under the Tax Receivable Agreement,
the payments are generally required to be made within ten business days after the tax benefit schedule (which sets forth the Company’s
realized tax benefits covered by the Tax Receivable Agreement for the relevant taxable year) is finalized. The Company is required to
deliver such a tax benefit schedule to the TRA Parties’ representative, for its review, within ninety calendar days after the due date
(including extensions) of the Company’s federal corporate income tax return for the relevant taxable year. For more information
regarding our accrued liability under the TRA as of December 31, 2024, see Note 15 “Tax Receivable Agreement” to the Consolidated
Financial Statements included in our Annual Report.
Investor Rights Agreement
In connection with the closing of the Business Combination, on July 2, 2021, the Company, Trasimene Capital FT, LP, Bilcar, Cannae
LLC and THL FTAC LLC (collectively with Trasimene Capital FT, LP, Bilcar and Cannae LLC, and together with their affiliated
transferees, the “Sponsor Investors”), and certain other investors entered into an Investor Rights Agreement (the “Investor Rights
Agreement”). Although other former investors have withdrawn from the Investor Rights Agreement and no longer have any director
appointment rights, the Investor Rights Agreement provides that the Sponsor Investors continue to have the right to designate and have
designated three of the eleven directors on our Board, including the Chairperson. As a result, the Sponsor Investors may be considered
to have significant influence with respect to the Company’s management, business plans and policies, including the appointment and
removal of the Company’s officers.
Designation Rights
The Investor Rights Agreement provides that for so long as the Sponsor Investors beneficially own at least 50% of the Common Stock
held by the Sponsor Investors on the Closing Date, the Sponsor Investors will retain the right to designate three directors. If the
Sponsor Investors hold less than 50% of the Common Stock held by the Sponsor Investors on the Closing Date, the Investor Rights
Agreement provides that they will have the right to designate (1) if they collectively beneficially own at least 7.5% of the aggregate
outstanding Common Stock, three directors, (2) if they collectively beneficially own at least 6.25% (but less than 7.5%) of the aggregate
outstanding Common Stock, two directors, and (3) if the Sponsor Investors collectively beneficially own at least 2.5% (but less than
6.25%) of the aggregate outstanding Common Stock, one director. In addition, the Investor Rights Agreement provides that Cannae
LLC (or, if Cannae LLC is no longer party to the Investor Rights Agreement, the applicable designator for the Sponsor Investors at such
time) will have the right to consent to any individual nominated for election to the Board seat initially occupied by the CEO of the
Company, for so long as the Sponsor Investors collectively beneficially own at least 7.5% of the aggregate outstanding Common Stock.
