CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain Transactions
Transaction
Implementation Agreement
On November 6, 2020, we entered into a transaction implementation agreement with Montauk Holdings Limited, our former parent
company (“MNK”) (as amended, the “Transaction Implementation Agreement”). The Transaction Implementation Agreement (“TIA”) governs the overall terms of the relationship between Montauk and MNK following the distribution
by MNK on January 26, 2021 of all of the outstanding shares of Montauk common stock as a pro rata dividend to holders of MNK’s ordinary shares (the “Distribution”) and the completion of Montauk’s initial public offering of
its common stock on January 26, 2021.
Pursuant to the TIA, we executed several reorganization transactions that resulted in Montauk owning all of the assets and
entities through which MNK’s business and operations were conducted. Generally, the TIA provides for the termination of all intercompany agreements and accounts between Montauk and its subsidiaries, on the one hand, and MNK, on the other hand,
other than with respect to the promissory note described below and was accompanied by a mutual release of claims between MNK and Montauk for all matters arising prior to the Distribution. In addition, the TIA governs the treatment of access to
information, rights to privileged information and record retention.
Pursuant to the TIA, we paid MNK $650,000 in the first fiscal quarter of 2025, $45,000 in Fiscal
2024 and $113,000 in Fiscal 2023.
In December 2021, Rivetprops 47 Proprietary Limited (“RP47”) entered into an agreement to loan MNK up to 10,000,000 South
African Rand (the “RP47 Loan”). The principal balance and accrued interest was 11,713,000 Rand or approximately $650,000 US Dollars. There was no collateral pledged for this loan. This loan became due on December 31, 2024 when MNK and
RP47 did not extend the maturity of the loan agreement. On February 2, 2025, our Board of Directors approved the repayment of the RP47 Loan under the TIA and on March 5, 2025 we repaid the RP47 Loan as required under the TIA. The amount
repaid is included in the principal balance of the Promissory Note described below.
Promissory Note with MNK
On January 26, 2021, we entered into a Loan Agreement and Secured Promissory Note (as amended, the “Promissory Note”) with MNK. MNK is currently our
affiliate and certain of our directors are also directors and executive officers of MNK. Pursuant to the Promissory Note, we initially advanced a cash loan of $5,000,000 to MNK for it to pay a dividends tax liability arising from the reorganization
and distribution prior to the IPO. The current principal balance of the Promissory Note is $10,690,000 and the maturity date is December 31, 2033. We hold a security interest in 976,623 shares of our common stock held by MNK. MNK is required to
use the proceeds of any sale of the shares to repay the Promissory Note. The Promissory Note has default provisions pursuant to which MNK will deliver any unsold shares of Montauk back to us to satisfy repayment of the Promissory Note.
Administrative Services Agreement with HCI Managerial Services Propriety Limited
Mr. Copelyn is the chief executive officer of HCI and Mr. Govender is the executive director of HCI. Messrs. Copelyn and Govender both serve on the board of
directors of HCI Managerial Services (Pty) Limited, a subsidiary of HCI (“HCI Managerial”). HCI Managerial provides certain administrative services to Montauk pursuant to administrative services agreements, which services include, among
other matters, (1) corporate secretarial services relating to maintaining documents and records, and assisting with South African regulatory compliance matters and (2) assistance with preparation of earnings reports required by South
African rules and regulations. Pursuant to our agreements with HCI Managerial, we pay a monthly fee of 20,000 Rand, plus applicable VAT thereon, for such services.
Policies and Procedures for Related Party Transactions
We adopted a written policy relating to the approval of related party transactions. A “related party transaction” is a transaction, arrangement or relationship,
or series of similar transactions, arrangements or relationships, in which we participate (whether or not we are a party) and a related party has a direct or indirect material interest in such transaction. Our Audit Committee reviews and approves or
disapproves, or ratifies, all relationships and related party transactions between us and (1) our directors, director nominees or executive officers, (2) more than 5% owners of our common stock, (3) any immediate family member of any
person specified in (1) and (2) above, and (4) any firm, corporation or other entity in which any person specified in (1), (2) or (3) above is employed or is a partner or principal or in a similar position, or in which such
person has more than a 5% beneficial ownership interest. The Audit Committee reviews all related party transactions reported to it and, where the Audit Committee determines that such transactions are in our best interests and the best interests of
our stockholders, approves such transactions in advance of such transactions being given effect.
22 – Montauk Renewables, Inc.| 2025 Proxy
Statement