RELATED PARTY TRANSACTIONS
Our Board has adopted a written related party transactions policy, pursuant to which a “Related Party Transaction” is defined pursuant to Item 404 of Regulation S-K. Pursuant to this policy, our Audit Committee will review all material facts of all Related Party Transactions and either approve or disapprove entry into the Related Party Transaction, subject to certain limited exceptions. In determining whether to approve or disapprove entry into a Related Party Transaction, our Audit Committee shall take into account, among other factors, the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Person’s interest in the transaction. Furthermore, the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations. There have been no Related Party Transactions since January 1, 2025 where the procedures described above did not require review, approval or ratification or where these procedures were not followed.
In 2017, we entered into the following Related Party Transactions, which were ongoing during 2025: (i) in connection with the closing of the IPO, the Company entered into agreements with the Original Investors, that include (a) a registration rights agreement in which we agreed to register the sale of shares of our Class A Common Stock under certain circumstances; (b) the Solaris LLC Agreement pursuant to which each Original Investor has, subject to certain limitations, the right to cause Solaris LLC to acquire all or a portion of its Solaris LLC Units for, at Solaris LLC’s election, (x) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Solaris LLC Unit redeemed, subject to the conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions, or (y) an equivalent amount of cash, and, in connection therewith, a corresponding number of shares of Class B Common Stock will be cancelled; and (c) a tax receivable agreement that generally provides for the payment by the Company to the Original Investors and their permitted transferees of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that the Company actually realizes (computed using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the IPO; and (ii) administrative services arrangements with Solaris Energy Management, LLC and Blanco Air Services, LLC, companies owned by Mr. Zartler, the Chairman of the Board and Co-Chief Executive Officer of the Company, for the provision of certain services, including rent paid for office space, travel services, and other administrative support, to us at cost, which totaled approximately $700,000 and $300,000 for the fiscal years ending December 31, 2025 and 2024, respectively. The Company did not include any prepaid expenses and other current assets on the consolidated balance sheets as of December 31, 2025. As of December 31, 2024, the Company included $100,000 in related prepaid expenses and other current assets on the consolidated balance sheets. Additionally, as of each of December 31, 2025 and 2024, the Company included $100,000 of accruals to related parties in accrued liabilities on the consolidated balance sheet.
MER Acquisition
On July 9, 2024, we entered into a contribution agreement (the “Contribution Agreement”), with Solaris LLC, John A. Johnson, an individual resident of the State of Florida, John Tuma, an individual resident of the State of Texas, J Turbines, Inc., a Delaware corporation (“J Turbines”) and KTR Management Company, LLC, a Texas limited liability company (“KTR” and, together with J Turbines, the “Contributors”), pursuant to which the Contributors agreed to contribute (the “Contribution”) all of the issued and outstanding equity interests of Mobile Energy Rentals LLC, a Texas limited liability company (“MER”) to Solaris LLC, subject to terms and conditions set forth therein (the “MER Acquisition”), which closed on September 11, 2024 (the “Closing Date”). On the Closing Date, the Contribution was consummated and Solaris LLC received 100% of the issued and outstanding equity interests of MER, with aggregate consideration for the Contribution consisting of the issuance of 16,464,778 Solaris LLC units and an equal number of shares of Class B Common Stock with the fair value of the total purchase consideration transferred as approximately $323.1 million.
In connection with the MER Acquisition, we acquired a lease agreement for commercial real estate with KTR, which, as of December 31, 2025, owned 13.0% of the outstanding shares of our Class B Common Stock, representing 2.9% of the total voting shares. As of December 31, 2025, we recognized an operating lease right-of-use asset and a corresponding operating lease liability of $100,000, split between current and non-current portions, on the consolidated balance sheets. For the year ended December 31, 2025, we incurred $200,000 of rental expense related to the commercial real estate lease, included in cost of services on the consolidated statements of operations. During the fourth quarter 2024, we also began a short-term rental of equipment from
