Certain Transactions
Transaction
Implementation Agreement
On November 6, 2020, we entered into a transaction implementation agreement with MNK (as amended, the Transaction
Implementation Agreement). The Transaction Implementation Agreement (TIA) governs the overall terms of the relationship between the Company 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 MNKs ordinary shares (the Distribution) and the completion of the IPO.
Pursuant to the TIA, the Company executed several reorganization transactions that resulted in the Company owning all of the assets and entities through which MNKs
business and operations were conducted. Generally, the TIA provides for the termination of all intercompany agreements and accounts between the Company 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 the Company 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 $796,000 in Fiscal 2021 and $52,000 in Fiscal 2022.
Promissory Note with MNK
In connection with the closing of the IPO and the Distribution, on January 26, 2021, the Company entered into a Loan Agreement and Secured Promissory
Note (the Initial Promissory Note) with MNK. MNK is currently an affiliate of the Company and certain of the Companys directors and executive officers are also directors and executive officers of MNK. Pursuant to the Initial
Promissory Note, the Company advanced a cash loan of $5,000,000 to MNK for MNK to pay its dividends tax liability arising from the Distribution under the South African Income Tax Act, 1962 (Act No. 58 of 1962), as amended. On February 22,
2021, the Company and MNK entered into an Amended and Restated Promissory Note (the Amended Promissory Note) to increase the principal amount of the loan to a total of $7,140,000 in the aggregate. On December 22, 2021, the Company
and MNK entered into the Second Amended and Restated Promissory Note (the Second Amended Promissory Note) to increase the principal amount of the loan to a total of $8,940,000, in the aggregate, in accordance with the Companys
obligations set forth in the TIA. On December 22, 2022, Montauk entered into the First Amendment to the Second Amended Promissory Note, by and between Montauk and MNK (the First Amendment), which extended the maturity date of the
loan under the Second Amended Promissory Note from December 31, 2022 to June 30, 2023. All other terms of the MNK Loan Agreement remain unchanged.
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 the Company 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 agreement with HCI Managerial, we pay a monthly fee of R20,000, 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.
As
set forth in the related party transaction policy, in the course of its review and approval or ratification of a related party transaction, the Audit Committee, in its judgment, considers all relevant factors, including but not limited to the
benefits to us, the impact on the related party, the availability and terms of comparable products or services and other various factors enumerated in the policy.
Montauk
Renewables, Inc.| 2023 Proxy Statement 21