Battalion Oil (BATL) PRER14APreliminary revised proxy

NOTICE IS HEREBY GIVEN that Battalion Oil Corporation, a Delaware corporation (which we refer to as the “Company,” “we” or “us”), will hold a special meeting (which we refer to as the “special meeting”) of holders of shares of common stock, par value $0.0001 per share, of the Company (which we refer to as “Company common stock” and holders of which we refer to as “Company stockholders”) on [•], 2024, at 11 a.m., Central Time. You will be able to attend the special meeting by first registering at www.proxyvote.com. To participate in the special meeting, you will need the control number included on your notice, on your proxy card or on the instructions that accompanied your proxy materials. Company stockholders will be able to listen, vote and submit questions during the virtual meeting. Please be sure to check in 15 minutes prior to the start of the meeting so that any technical difficulties may be addressed before the special meeting live audio webcast begins. Please note that you will not be able to attend the virtual special meeting in person. We are holding the special meeting to consider and vote upon the following matters:

The board of directors of the Company has fixed the close of business on October 4, 2024 as the record date for the special meeting. Only Company stockholders of record at that time are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof. Adoption of the Merger Agreement requires the affirmative vote at the special meeting or by proxy of holders of a majority of the outstanding stock of the Company entitled to vote thereon (which we refer to as the “Company requisite vote”).

The Company, a Delaware corporation, is an independent energy company focused on the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets currently in the Delaware Basin in the United States, where we have an extensive drilling inventory that we believe offers attractive long-term economics.

Our working interests in 39,867 net acres in the Delaware Basin as of December 31, 2023 are in Pecos, Reeves, Ward and Winkler Counties, Texas. This resource play is characterized by high oil and liquids-rich natural gas content in thick, continuous sections of source rock that can provide repeatable drilling opportunities and significant initial production rates. Our primary targets in this area are the Wolfcamp and Bone Spring formations. As of December 31, 2023, we had 90 operated wells producing in this area in addition to minor working interests in 19 non-operated wells. Our average daily net production from this area for the year ended December 31, 2023 was 13,784 Boe/d.

Company common stock is traded on the NYSE American under the symbol “BATL.” Additional information about the Company and its subsidiaries is included in documents incorporated by reference into this proxy statement. See “Where You Can Find More Information.” The Company maintains a website at battalionoil.com. The information provided on the Company’s website is not part of this proxy statement and is not incorporated by reference.

Parent is a Delaware corporation and a direct, wholly owned subsidiary of Ruckus Energy Holdings, LLC, a Delaware limited liability company. Parent is a newly formed corporation formed solely for the purpose of pursuing the Merger and has no significant assets or operating history. Ruckus has no obligation to fund any portion of any amounts that may be due to the Company or Company stockholders under the Merger Agreement, including the Merger Consideration.

Merger Sub is a Delaware corporation and a direct, wholly owned subsidiary of Parent. Merger Sub was formed solely for the purpose of entering into the Merger Agreement and consummating the Merger. Merger Sub has not carried on any activities on or prior to the date of this proxy statement except for activities incidental to its formation and activities in connection with Parent’s acquisition of the Company. Upon completion of the Merger, Merger Sub will merge with and into the Company and Merger Sub will cease to exist.

The Board has fixed the close of business on October 4, 2024 as the record date for the determination of the Company stockholders entitled to notice of, and to vote at, the special meeting. As of the close of business on the record date, there were 16,456,563 shares of Company common stock outstanding and entitled to vote, held by approximately 50 holders of record. You will have one vote on each matter properly coming before the special meeting for each share of Company common stock that you owned on the record date.

The presence at the virtual special meeting or by proxy of the holders of record of a majority of the capital stock issued and outstanding and entitled to vote at the special meeting shall constitute a quorum at the special meeting. All shares of Company common stock present at the virtual special meeting or represented by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting. If a beneficial owner of Company common stock held by a broker in “street name” does not give voting instructions to the broker, then those shares will not be counted as present at the virtual special meeting or by proxy at the special meeting.

The affirmative vote of the Company stockholders holding a majority of the outstanding shares of Company common stock as of the close of business on the record date is required to adopt the Merger Agreement (which we refer to as the “Company requisite vote”). Because the required vote for the proposal to adopt the Merger Agreement is based on the number of votes the Company stockholders are entitled to cast rather than on the number of votes actually cast, if you fail to authorize a proxy or vote online at the meeting, abstain from voting at the meeting, or fail to instruct your broker on how to vote, such failure will have the same effect as votes cast “AGAINST” the proposal to adopt the Merger Agreement. As of October 4, 2024, the record date for the special meeting, [8,228,282] shares of Company common stock constitute a majority of the issued and outstanding shares of Company common stock. The required vote does not require the affirmative vote of a majority of the unaffiliated security holders (as defined in Rule 13e-3 under the Exchange Act).

Approval of the compensation proposal, on a non-binding, advisory basis, requires, assuming a quorum is present, the affirmative vote of a majority of the shares of Company common stock properly cast at the special meeting on the proposal. The approval of the compensation proposal is on a non-binding, advisory basis and is not a condition to the completion of the Merger.

Approval of the adjournment proposal to adjourn the special meeting (a) when a quorum is present, requires the affirmative vote of Company stockholders holding a majority of the shares of Company common stock properly cast at the special meeting on the proposal and (b) when a quorum is not present, requires the affirmative vote of Company stockholders holding a majority of the shares of Company common stock present virtually or represented by proxy at the special meeting.

Abstentions will not considered votes cast on such matters. If a Company stockholder abstains from voting, that abstention will be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as if the Company stockholder voted “AGAINST” the proposal to adopt the Merger Agreement. Assuming a quorum is present, abstentions will have no effect on the outcome of the compensation proposal or the adjournment proposal other than reducing the number of affirmative votes required to achieve a majority for such matters by reducing the total number of shares of Company common stock from which the majority is calculated. If a quorum is not present, abstentions will have no effect on the compensation proposal and will count as a vote “AGAINST” the adjournment proposal.

If you are a beneficial owner of shares of Company common stock held in “street name,” you should receive instructions from your bank, broker or other nominee holder that you must follow in order to have your shares of Company common stock voted. If you have not received such voting instructions or require further information regarding such voting instructions, contact your bank, broker or other nominee holder. If your bank, broker or other holder of record holds your shares of Company common stock in “street name,” such record holder will vote your shares of Company common stock only if you provide instructions on how to vote by filling out the voter instruction form sent to you by such record holder with this proxy statement. Please note that, if you are a beneficial owner of shares of Company common stock held in “street name” and wish to vote virtually at the special meeting, you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you will not be admitted to the virtual Annual Meeting.

Under stock exchange rules, brokers who hold shares of Company common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, such record holders

If you are a stockholder of record of shares of Company common stock, you may revoke a proxy by:

If you are a “street name” holder of shares of Company common stock, you may change your vote by submitting new voting instructions to your bank, broker or other holder of record or obtaining a legal proxy and voting in person at the special meeting. You must contact the record holder of your shares to obtain instructions as to how to change your proxy vote.

Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the Merger proposal. In the event that there is present, virtually or by proxy, sufficient favorable

The Company is soliciting your proxy in conjunction with the Merger. The Company will bear the cost of soliciting proxies from you. In addition to solicitation of proxies by mail, the Company will request that banks, brokers and other holders of record send proxies and proxy materials to the beneficial owners of Company common stock and secure their voting instructions.

On December 14, 2023, in connection with the Merger Agreement, Parent entered into a Voting Agreement (which we refer to as the “Voting Agreement”) with Luminus and Oaktree pursuant to which they have agreed, among other things, to vote certain shares of Company common stock they own or will own in favor of adopting the Merger Agreement and any other actions contemplated by the Merger Agreement in respect of which the approval of the Company stockholders is requested. Pursuant to the Voting Agreement, Luminus and Oaktree have agreed: (a) when a meeting of the Company stockholders is held, they will appear at such meeting or otherwise cause their subject shares to be counted as present for the purpose of establishing a quorum and (b) they will vote or cause to be voted at any such meeting certain of their shares (i) in favor of adopting the Merger Agreement and any other actions contemplated by the Merger Agreement in respect of which the approval of the Company stockholders is requested, (ii) in favor of adopting of any proposal in respect of which the Board has (A) determined is reasonably necessary to facilitate any of the transactions contemplated by the Merger Agreement, (B) disclosed the determination described in the foregoing clause (A) in the proxy statement or other written materials disseminated to the holders of shares of Company common stock and (C) recommended to be adopted or approved by the holders of shares of Company common stock, and (iii) against (A) any Company takeover proposal (as defined in “The Merger Agreement — Non-Solicitation of Acquisition Proposals”), whether or not constituting a Company superior proposal (as defined in “The Merger Agreement — Non-Solicitation of Acquisition Proposals”), and (B) any action, proposal, transaction or agreement that would reasonably be expected to prevent, impair, delay or otherwise interfere with the consummation of the Merger or the other transactions contemplated by the Merger Agreement. The shares of Company common stock subject to the voting agreement are approximately 38% of the Company common stock.

In addition, Luminus and Oaktree have agreed to not to, directly or indirectly (a) (i) transfer, or enter into any contract, option or other arrangement or understanding with respect to the transfer of, any shares to any person or entity, or (ii) enter into any voting arrangement, whether by proxy, Voting Agreement or otherwise, or grant a proxy or power of attorney with respect to any shares, or deposit any shares into a voting trust, or (b) (i) initiate, solicit or knowingly take any action to facilitate, solicit or encourage any acquisition proposal or the making of any proposal that would reasonably be expected to lead to a Company takeover proposal or (ii) participate in any discussions or negotiations regarding, or furnish or provide any non-public information to any person or entity in connection with, any Company takeover proposal; provided, that in the event a person or entity submits a Company takeover proposal to the Company, such holder and its representatives may hold discussions with such person or entity solely with respect to the terms of a proposed Voting Agreement with respect to the transaction contemplated by such Company takeover proposal following such time as the Company determines that the Board may take any of the actions permitted under the relevant provisions of the Merger Agreement.

As of the record date, Luminus and Oaktree owned approximately 10.1 million shares of Company common stock.

On December 30, 2022, the Board held a telephonic meeting at which representatives of Houlihan Lokey were present. Houlihan Lokey provided updates on the ongoing sale process and outreach efforts, including the status of negotiations of customary confidentiality agreements with potential bidders and the extent to which bidders were engaging with the due diligence materials in the online virtual data room.

Between January 6, 2023 and January 27, 2023, the Board held four meetings at which Houlihan Lokey provided the Board updates on engagement with and onboarding of potential bidders in the sale process, updates as to the status of the bidders’ exploration of an acquisition of the Company and the bidders’ due diligence review of the Company and its business and, in the course of such meetings, the Board instructed Company management and Houlihan Lokey to set February 7, 2023 as the date by which bidders’ preliminary proposals would be due and to inform the bidders of such date. At the January 27, 2023 meeting, Houlihan Lokey indicated to the Board that certain bidders, including Party B and Party C, were considering making non-conforming proposals to acquire a certain portion of the Company’s assets rather than making proposals to acquire the Company as a whole, whether through a merger or otherwise. After discussion and deliberation, the Board determined that it would permit bidders to propose transactions in which a buyer would acquire less than all of the Company’s assets or capital stock and instructed Company management to work with Mayer Brown to prepare a form of asset purchase agreement that could be shared with the bidders at the appropriate time.

Between January 9, 2023 and February 7, 2023, Company management delivered in-person management presentations with respect to the Company and its business to a total of 13 prospective bidders. Additionally, Houlihan Lokey facilitated due diligence with 10 other prospective bidders that did not specifically request management presentations. In all, a total of 23 prospective bidders were actively evaluating a transaction

Beginning in mid-February 2023, the Board, in consultation with Company management, determined that the Company would need to raise approximately $20 million in cash by the end of Q1 2023 to maintain compliance with the debt and liquidity covenants in the Company’s credit facility. In an effort to raise funds to maintain compliance with such covenants, the Board and Company management explored a number of strategic alternatives, including (a) a possible sale of certain oil and gas producing assets of the Company, (b) recommencing active drilling and production operations which would be financed through equity financing and (c) equity financing through a private placement of the Company’s preferred stock. The Board determined after consulting with Houlihan Lokey that, in light of the Company’s debt burden, it was unlikely that a third party investor would be willing to provide the Company equity financing on reasonably acceptable terms and the Company’s only viable equity financing sources were its three largest stockholders, the Rollover Sellers and Gen IV Investment Opportunities, LLC (which, together with its affiliates, we refer to as “Gen IV” and collectively with the Rollover Sellers, the “Significant Stockholders”), which collectively appointed three directors to the Company’s six member Board. As a result, the Board established a special committee of the independent and disinterested members of the Board (which we refer to as the “Equity Financing Special Committee”), consisting of William Rogers and Gregory Hinds, on February 24, 2023 to evaluate and provide a recommendation to the Board on a transaction to resolve the Company’s imminent covenant breaches and liquidity challenges. In establishing the Equity Financing Special Committee, the Board resolved it would not approve and authorize any transaction that the Equity Financing Special Committee did not first recommend to the Board. Over the course of February and March 2023, the Equity Financing Special Committee and the Board considered and deliberated a proposed sale of certain Company assets, recommencing active drilling and production operations and equity financing through a sale of preferred stock to the Significant Stockholders. The Board and the members of the Equity Financing Special Committee determined not to pursue recommencing active drilling and production operations since it would require equity financing greater than the $20 million necessary to maintain covenant compliance as of the end of Q1 2023 and there was a substantial risk that recommencing such operations would not remedy the Company’s future liquidity needs in a reasonably near-term timeframe. Furthermore, in the course of exploring such an asset sale and providing potential acquirers an opportunity to perform due diligence on such assets, only one potential acquirer made an offer to purchase the assets at a purchase price of approximately $17.4 million and subsequently indicated, after further due diligence review and as a result of falling oil prices, that it would likely need to reduce its proposed purchase price by at least 15%. After deliberation and review, the Equity Financing Special Committee determined that the valuation proposed

On February 22, 2023, Company management delivered a second management presentation to Party I.

On March 9, 2023, the Board held a telephonic meeting at which representatives of Mayer Brown were present. Representatives of Houlihan Lokey provided an update that the Company had received an unsolicited offer from Party Y for an acquisition of the Company for an aggregate purchase price of $372 million and indicated that, as of such time, only Parties I and Y remained interested in actively participating in the sale process. The Board instructed Company management and Houlihan Lokey to engage with Party Y, explore its proposed transaction and provide it access to due diligence materials regarding the Company after Party Y executed a confidentiality agreement. The Board also instructed Company management and Houlihan Lokey to explore including other potential acquirers in the sale process and, if any emerged, to explore their interest in a potential transaction and provide them access to due diligence materials regarding the Company after they execute a confidentiality agreement.

On March 14, 2023, Houlihan Lokey discussed Party Y’s likely financing sources for a transaction with representatives of Party Y.

On March 21, 2023, Party Y executed a confidentiality agreement with the Company, which contained customary provisions, including standstill provisions that, for a period of one year, prohibit Party Y, without the prior written consent of the Board, from participating in a proposal for the Company either publicly or privately or from asking the Company to amend or waive such standstill provisions (often referred to as a “don’t ask, don’t waive” provision). Later on March 21, 2023, Party Y was provided access to certain limited due diligence materials with respect to the Company in an online virtual data room.

On March 23, 2023, a representative of Ruckus contacted a representative of Houlihan Lokey to express Ruckus’s interest in a potential acquisition of the Company.

On March 28, 2023, Ruckus executed a confidentiality agreement with the Company, which contained customary provisions, including standstill provisions that, for a period of one year, prohibit Ruckus, without the prior written consent of the Board, from participating in a proposal for the Company either publicly or privately or from asking the Company to amend or waive such standstill provisions (often referred to as a “don’t ask, don’t waive” provision).

On March 29, 2023, Company management delivered a management presentation regarding the Company and its business to representatives of Party Y.

On March 31, 2023, Ruckus was provided access to certain limited due diligence materials with respect to the Company in an online virtual data room.

On April 2, 2023, Richard Little resigned as Chief Executive Officer of the Company and Matthew Steele was appointed to the role of Chief Executive Officer of the Company by the Board.

On April 10, 2023, Mr. Little and Abraham Mirman, Chief Executive Officer of Ruckus, had an introductory conversation during which they discussed Mr. Little’s experience as Chief Executive Officer of the Company.

On April 12, 2023, the Board held a telephonic meeting at which representatives of Houlihan Lokey were present. Company management and representatives of Houlihan Lokey provided the Board an update on the status of discussions with each of the parties that remained in the process. Company management also indicated that the Company was considering certain other strategic alternatives, including the possibility that the Company operate on a standalone basis. After discussion and deliberation, the Board instructed Company management and Houlihan Lokey to engage with the remaining participants in the process and explore a potential transaction with them.

On April 14, 2023, representatives of Houlihan Lokey and representatives of Ruckus had a meeting to discuss certain due diligence matters relating to the Company and its business.

On May 7, 2023, Mayer Brown prepared and circulated to Company management an issues list with respect to Ruckus’s markup of the draft Merger Agreement, which issues list reflected, among other things, (a) the inclusion of financing covenants applicable to Ruckus that are more favorable to the Company, and (b) the deletion of Ruckus’s proposed covenant applicable to the Company that would require the Company to operate the business in a manner so as to comply with a specified budget.

On May 9, 2023, the Board held a telephonic meeting. Mr. Steele summarized the terms of each of the indications of interest received and provided a general description of the financing proposed by each of the parties and the likelihood of execution on such financing based on discussions with each party to date. After discussion and deliberation, the Board determined it was premature to provide either Ruckus or Party Y with exclusivity. The Board instructed Company management to work with Houlihan Lokey to invite both Ruckus and Party Y into the next stage of the sale process, ask each party to increase their proposed purchase price, revert to Ruckus with the Company’s positions on the Merger Agreement consistent with Mayer Brown’s issues list and request that Party Y provide a comprehensive markup of the Merger Agreement as soon as possible. The closing price of Company common stock on the NYSE American on May 9, 2023 was $6.47.

On May 10, 2023, each of the Significant Stockholders delivered a letter to the Company (which we refer to as the “Commitment Letters”) pursuant to which such Significant Stockholder committed to, upon written request by the Company, provide additional equity financing to the Company in an aggregate amount equal to $38 million, collectively with the other Significant Stockholders, on substantially similar terms as the Series A Preferred Stock transactions.

On June 15, 2023, the Board held a telephonic meeting at which representatives of Houlihan Lokey were present. Company management and representatives of Houlihan Lokey provided the Board an update on the status of discussions with each of the parties that remained in the process and described the terms of the Merger Agreement under negotiation by the parties. They also described for the Board Party Z’s proposal contemplating a contribution of $57 million worth of assets and $35 million in cash to the Company in exchange for 41% of the issued and outstanding shares of Company common stock and certain warrants. After discussion and deliberation, the Board instructed Company management and Houlihan Lokey to continue negotiating the terms of the transaction with Parent and to continue to engage with Party Z and explore its proposal.

On June 21, 2023, representatives of the Company, Parent, Houlihan Lokey, Mayer Brown and KLG had a conference call to negotiate certain material terms of the Merger Agreement. During the call, the representatives of the Company, Parent, Mayer Brown and KLG discussed, among other things, the Company’s deletion of Parent’s proposed facility operation condition, a covenant to reimburse Parent for its expenses under certain circumstances and covenants restricting the Company’s ability to operate certain of its assets without Parent’s prior written consent.

Effective as of June 22, 2023, the Company entered into an addendum to the engagement letter with Houlihan Lokey, which addendum requested that, in connection with the sale process, Houlihan Lokey render to the Board a written opinion as to whether the Merger Consideration to be received by the holders of shares of the Company common stock in the proposed Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

On June 27, 2023, representatives of the Company, Parent and Houlihan Lokey had a call to discuss the draft of Voting Agreement and revisions to the Merger Agreement.

On June 28, 2023, Party Y submitted a revised indication of interest and proposed to structure the transaction as a sale of all of the Company’s assets for an aggregate purchase price equal to $435 million. Party Y’s indication specified a proposed debt financing source, but not any equity financing sources, and did not include any financing commitment letters from any financing sources.

On June 29, 2023, representatives of the Company, Parent, Houlihan Lokey, Mayer Brown and KLG had a conference call to negotiate certain material terms of the Merger Agreement. During the call, the representatives of the Company, Parent, Mayer Brown and KLG discussed, among other things, Parent’s proposals to add the following terms to the Merger Agreement: (a) a condition to closing that certain oil and gas related representations and warranties be true and correct in all respects at the closing, (b) a condition that the Company shall have extended its leased drilling obligations at a certain property in a manner reasonably satisfactory to Parent, and (c) a covenant that the Company novate certain of its hedges to Parent at or prior to the closing.

In early July 2023, Mr. Steele and representatives of Party Z had a discussion in which Party Z confirmed that it was not interested in acquiring the Company as a whole and would not be increasing its

On August 11, 2023, Mayer Brown prepared and representatives of the Company delivered a revised draft of the Merger Agreement to representatives of Parent that would not require Parent to have committed debt financing at signing and modified certain of the representations, warranties and covenants relating to the Company’s oil and gas operations to be more favorable to the Company.

On August 14, 2023, Mr. Mirman delivered a preliminary draft term sheet for the proposed preferred stock to be issued in the rollover and investment transaction to Mr. Barrett. The term sheet contemplated a purchase price of $1,000 per share of preferred stock and an undefined cumulative dividend rate for such preferred stock, which dividends would accrue and be payable on the earlier of an undefined mandatory redemption date or a liquidation event. Such preferred stock would be convertible into common stock at an undefined conversion price, and Parent would have the option to redeem the preferred stock three years after issuance. On a change of control, the holder of preferred stock would have the right to either convert their preferred stock into common stock, or require Parent to redeem the preferred stock for the purchase price plus accrued dividends. The holders of preferred stock would not have any voting rights other than customary protective provisions, and would have the right to appoint one director to the board of Parent. The preferred stock would have customary anti-dilution protections.

On August 15, 2023, Mr. Barrett, on behalf of the Significant Stockholders, provided initial feedback on the term sheet for the proposed preferred stock rollover and investment transaction to Mr. Mirman. Mr. Barrett proposed that if the preferred stock was not redeemed on the mandatory redemption date, the dividend rate would increase by 6% and dividends would be required to be paid in cash, with an additional increase three years after the mandatory redemption date, and that the conversion price would also decrease by an undefined amount if the preferred stock was not redeemed on the mandatory redemption date. Mr. Barrett also objected to Parent’s optional redemption right three years after issuance.

On August 16, 2023, the Board held a telephonic meeting. Company management provided the Board an update on the status of discussions with each of the parties that remained in the process and indicated that, based on recent discussions between Company management and Parent, Parent’s financing with respect to a possible transaction remained in question. After discussion and deliberation, the Board instructed Company management to continue to engage with Parent on a potential transaction and to report back to the Board once there were material developments with respect to Parent’s proposal.

On August 22, 2023, representatives of Parent delivered preliminary draft transaction documents for the preferred stock rollover to Mr. Barrett, including a draft purchase agreement for the cash investment portion of the transaction and a draft certificate of designations for the Parent preferred stock, as well as an updated draft of the proposed Voting Agreement.

Between August 25 and August 31, 2023, representatives of Parent and KLG, and representatives of the Significant Stockholders and Dechert LLP (which we refer to as “Dechert”), counsel for the Significant Stockholders, discussed the structure of the proposed preferred stock rollover and initial comments from the Significant Stockholders on the draft transaction documents. During this time, Parent and the Significant Stockholders agreed that the compounding dividends would accrue on the preferred stock at a rate of 9% per annum if paid in cash, and 12% per annum if not paid in cash, and that such dividend rates would increase by 6% if the preferred stock was not redeemed (if requested by the holders) on or about the fifth year after issuance. Parent and the Significant Stockholders also agreed that Parent would not have any optional redemption rights with respect to the preferred stock. Parent and the Significant Stockholders also agreed that the obligation of the Significant Stockholders to consummate the preferred stock rollover and investment transactions would be conditioned upon Parent raising at least $200 million of common equity financing.

On August 29, 2023, Parent delivered a proposed term sheet from Fortress and Meritz contemplating debt financing of $175 million in respect of a possible merger transaction.

Later on August 29, 2023, Mr. Mirman and Mr. Steele had a conversation in which Mr. Mirman conveyed that Parent’s next revised indication of interest would likely include a proposal contemplating a preferred stock rollover and investment by the Significant Stockholders.

On September 14, 2023, KLG sent markups of the Parent preferred stock investment and rollover documents to Dechert.

On September 19, 2023, Meritz undertook a site visit to observe the Company’s operations at certain of its drilling platforms.

Also on September 19, 2023, representatives of KLG and Dechert had a telephone call to discuss the Parent preferred stock rollover and investment documents.

On September 20, 2023, Parent sent drafts of form debt commitment letters from Fortress and Meritz to the Company.

On September 21, 2023 Dechert sent markups of the transaction documents for the preferred stock rollover and investment transactions to KLG.

On September 22, 2023, representatives of the Company, Parent and Houlihan Lokey had a conference call to discuss Parent’s financing in connection with the possible transaction and issues to be resolved ahead of a potential signing.

On October 6, 2023, Parent delivered to the Company a further revised proposal which reduced the purchase price to $8.00 per share. A further revised draft of the Merger Agreement accompanied Parent’s proposal and reflected, among other things, a condition making Parent’s obligation to close contingent on it obtaining financing sufficient to consummate the transaction.

On October 9, 2023, Mr. Steele had a call with Mr. Mirman and explained that the Company would not engage with Parent on the recently revised terms proposed by it.

On October 11, 2023, representatives of the Company, Parent and Houlihan Lokey had a conference call and Mr. Mirman conveyed to Company management that Parent would not require a financing condition to closing and would be amenable to deleting that language from the draft of the Merger Agreement it provided with its revised proposal. Mr. Mirman also proposed that Parent would accept a reverse termination fee in an amount equal to $16 million and that such amount would be funded into an escrow account at signing.

On October 12, 2023, the Board held a telephonic board meeting at which representatives of Houlihan Lokey were present. Mr. Steele described compromises proposed by Mr. Mirman on the October 11, 2023 call between Company management, Parent and Houlihan Lokey. After discussion and deliberation, the Board members unanimously determined that $8.00 was insufficient to warrant continued engagement with Parent and instructed Company management and Houlihan Lokey to indicate to Parent that the Company would terminate discussions with Parent unless it raised its proposed purchase price.

On October 13, 2023, representatives of the Company, Parent and Houlihan Lokey had a conference call and Mr. Steele conveyed to Mr. Mirman the message that the Board instructed him to deliver at the October 12, 2023 meeting. In addition, representatives of the Company and Parent negotiated certain material terms of the Merger Agreement and Parent confirmed that it was amenable to deleting the financing contingency, a reverse termination fee amount equal to $16 million and allowing the Company to terminate the Merger Agreement and receive the reverse termination fee if Parent did not deliver proof of equity financing sufficient to close the deal within 60 days of signing.

On October 16, 2023, the special committee held a telephonic meeting to consider the proposed merger with Parent. After discussion and deliberation and consideration of the information presented at the Board meetings and materials provided to the special committee, the special committee determined that the Company should press Parent to increase its proposed purchase price to a number higher than $8.00 per share.

On October 17, 2023, the Board held a telephonic board meeting at which representatives of Houlihan Lokey were present. Mr. Steele described Company management’s discussions with Parent on October 13, 2023 and the terms proposed by Parent in its latest draft of the Merger Agreement. Mr. Steele also confirmed that Parent had accepted a $16 million reverse termination fee, but had not committed to increasing the purchase price higher than $8.00. After discussion and deliberation, the Board instructed Company management and Houlihan Lokey to continue to negotiate the terms of a potential transaction with Parent, to press Parent to increase its purchase price and to ask that Parent provide proof of its ability to fund the $16 million in escrow.

Later on October 17, 2023, Mr. Steele conveyed to representatives of Parent the questions posed by the Board at its meeting earlier that day.

On October 19, 2023, representatives of Parent answered the questions posed by Mr. Steele and confirmed that Parent’s offer of $8.00 per share had not changed.

Later on October 19, 2023, the Board held a telephonic board meeting at which representatives of Houlihan Lokey were present. Mr. Steele described the responses received from Parent earlier that day to the Board’s questions. The Board instructed Company management and Houlihan Lokey to indicate to Parent that the Company would definitively terminate discussions with Parent unless it raised its proposed purchase price.

On December 8, 2023, KLG sent a markup of the Merger Agreement to Mayer Brown and Dechert.

Subsequently on December 14, 2023, the Board held a telephonic meeting at which representatives of Houlihan Lokey and Mayer Brown were present to, among other things, consider the proposed Merger with Parent. At the request of the Board, representatives of Houlihan Lokey reviewed with the Board their financial analyses with respect to the Company and the proposed Merger. Thereafter, at the request of the Board, Houlihan Lokey rendered its oral opinion to the Board (which was subsequently confirmed in writing by delivery to the Board of Houlihan Lokey’s written opinion dated December 14, 2023) to the effect that, as of December 14, 2023, and based upon and subject to certain assumptions, qualifications, limitations and other matters considered in connection with the preparation of the opinion, the merger consideration to be received by the holders of shares of the Company common stock in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. The special committee then confirmed its recommendation that the Board approve the Merger Agreement and the transactions contemplated by the Merger Agreement, determine that the Merger Agreement and the transactions contemplated by the Merger Agreement are advisable, fair to, and in the best interest of the Company and the unaffiliated stockholders, and submit the Merger Agreement to the Company’s stockholders for their approval. The Board then, after considering the recommendation of the special committee, unanimously (a) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement were advisable and fair to, and in the best interests of, the Company and its stockholders, (b) declared it advisable to enter into the Merger Agreement, (c) approved the execution, delivery and performance by the Company of the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement, (d) resolved to recommend that the stockholders of the Company adopt the Merger Agreement and (e) directed that the Merger Agreement be submitted to the Company’s stockholders for their approval.

Also on December 14, 2023, the Board executed a unanimous written consent approving the Series A-2 Preferred Stock transactions. In addition, each of the Significant Stockholders delivered a signed written consent approving the Series A-1 Certificate of Designations Amendment.

Throughout December 14, 2023, representatives of Mayer Brown, Dechert and KLG exchanged telephone calls and emails to finalize the various other transaction documents. Later in the evening on December 14, 2023, the Company, Parent and Merger Sub executed the Merger Agreement, and Parent, the Rollover Sellers and Lion Point executed the Voting Agreement and the transaction documents for the Parent preferred stock rollover and investment by the Rollover Sellers and Lion Point.

Prior to the opening of trading on the NYSE American on December 15, 2023, the Company issued a press release announcing entry into the Merger Agreement.

Later on December 15, 2023, the Board held a telephonic meeting. At such meeting, the Board unanimously approved the Series A-1 Certificate of Designations Amendment. Also on December 15, 2023, the Company filed the Series A-1 Certificate of Designations Amendment and the Certificate of

In the late evening of February 5, 2024 and the early morning of February 6, 2024, Mr. Mirman, Ms. Fuchs, Mr. Barrett, Mr. Mayer and representatives of KLG and Mayer Brown negotiated the terms of the Second Amendment. In the course of such negotiations, the participants developed a proposal on the terms of the Second Amendment which reflected, among other things, the following modifications to the terms of the Merger Agreement (which we refer to as the “proposed second amendment terms”): (a) extending the funding deadline from 5:00 p.m. Central Time on February 5, 2024 to 5:00 p.m. Central Time on February 15, 2024, (b) decreasing of the termination fee payable by the Company under certain circumstances set forth in the Merger Agreement from $8,000,000 to $3,500,000, (c) limiting the Company’s liability for damages to Parent and its affiliates under the Merger Agreement to $3,500,000, other than for certain willful breaches of the Merger Agreement by the Company, (d) permitting the Company to solicit alternative transaction proposals until Parent delivers to the Company evidence that it has obtained and has deposited in escrow from its equity financing sources an aggregate of $200,000,000 (less the amount of the Initial Deposit and Subsequent Deposit) (which we refer to as the “aggregate equity financing”), (e) permitting the Company to waive, in its sole discretion, any standstill provisions applicable to any participant in the sale process, (f) modifying the Company’s termination rights such that, instead of being able to terminate the Merger Agreement if Parent fails to deliver executed subscription agreements with respect to the aggregate equity financing on or before 5:00 p.m. Central Time on February 12, 2024, the Company shall be able to terminate the Merger Agreement if Parent fails to deliver executed subscription agreements with respect to an aggregate amount of equity financing equal to $100,000,000 by the funding deadline, (g) applying a material adverse effect standard to all representations and warranties of the Company set forth in the Merger Agreement, (h) deleting certain interim operating covenants, and (i) providing that, if Parent has completed the full escrow funding by the funding deadline and the Company terminates the Merger Agreement to accept a superior proposal or Parent terminates the Merger Agreement if the Board changes its recommendation with respect to the Merger, then in addition to paying Parent a termination fee the Company shall return to Parent the amounts released to the Company on January 24, 2024. In addition, in the course of such negotiations, (1) Mr. Mirman committed to personally guaranteeing certain payment obligations of Parent under the Merger Agreement, up to a cap of $1,000,000 (which we refer to as the “guaranteed obligations”), and (2) the representatives of Parent agreed amend its subscription agreement

Following the meeting of the Board, in the early morning of February 6, 2024, (a) the Company, Parent and Merger Sub executed the Second Amendment, (b) the Company and Mr. Mirman executed the Limited Guarantee, and (c) Parent, Merger Sub and the equity financing source executed the Subscription Agreement Amendment.

Prior to the opening of trading on the NYSE American on February 6, 2024, the Company filed a Current Report on Form 8-K announcing the entry into the Second Amendment by the Company, Parent and Merger Sub and the entry into the Limited Guarantee by the Company and Mr. Mirman and summarizing the material terms of the Second Amendment, the Limited Guarantee and the Subscription Agreement Amendment.

As of February 8, 2024, all but four confidentiality agreements and the standstill provisions contained therein that were entered into by participants in the sale process had expired and were no longer in effect. On February 8, 2024, the Company waived the four standstill provisions that then-remained in effect to the extent necessary to allow the potential acquirer make an offer directly to the Board with respect to a proposed transaction to acquire, directly or indirectly, alone or in concert with any other person, any ownership of any assets, businesses or securities of the Company.

After the execution of the Second Amendment, representatives of Houlihan Lokey and members of Company management initiated outreach to potential acquirers, including parties that participated in the sale process.

Under the terms of the Merger Agreement as amended by the Second Amendment, the funding deadline was extended to 5:00 p.m. Central Time on February 15, 2024. Following the execution of the Second Amendment, Company management requested, and representatives of Parent provided the Company, updates on the status of completion of the full escrow funding and Parent’s efforts to obtain the equity

Also in the evening on February 15, 2024, Mr. Barrett and Mr. Rogers had a call to discuss the matters considered by the members of the special committee and the Board at the Board meeting held earlier that evening. In their discussion, Mr. Rogers indicated that the lack of sufficiently detailed information provided by Parent with respect to its fundraising efforts raised concerns and made it difficult for him to approve a course in which the Company would continue to pursue a potential transaction with Parent. Mr. Barrett reaffirmed the belief that he and other members of the Board shared that approving the Third Amendment was the best course of action. In the course of their discussion, Mr. Rogers indicated that he would consider approving the Third Amendment so long as the special committee and the Board committed to adhering to a process in which Parent provided more detailed information regarding its fundraising efforts, which the special committee would review and consider, and then determine its recommendation with respect to whether to continue to pursue a transaction with Parent.

Later in the evening of February 15, 2024, the special committee held a telephonic meeting to consider a choice between a potential termination of the Merger Agreement and the Company’s entry into the Third Amendment after the motion to approve the Third Amendment was rejected earlier that evening. After discussion and deliberation, the special committee unanimously determined that (a) the Third Amendment and the proposed third amendment terms were advisable and fair to, and in the best interests of, the Company and the unaffiliated stockholders, (b) recommended that the Board approve the Third Amendment and the proposed third amendment terms and determine that the Third Amendment and the proposed third amendment terms were advisable, fair to, and in the best interest of the Company and the unaffiliated stockholders (we refer to the foregoing resolutions in clauses (a) and (b) as the “approval and recommendation of the Third Amendment”) and (c) the foregoing resolutions and recommendation would be approved on the basis that Company management would be directed to provide the special committee updates on Parent’s financing efforts, that the special committee would have a meeting on March 6, 2024 to consider all information received by it with respect to Parent’s financing efforts to date and that the Board would convene a meeting on March 7, 2024 to receive the special committee’s recommendation with respect to the transaction (we refer to the foregoing resolutions in clause (c) as the “financing information requirements”).

In the late evening of February 15, 2024 and the early morning hours of February 16, 2024, Mayer Brown and KLG finalized the draft of the Third Amendment.

Later in the early morning of February 16, 2024, the Board held a telephonic meeting to reconsider a choice between a potential termination of the Merger Agreement and the Company’s entry into the Third Amendment, which had been considered at length at the Board meeting held the previous day on February 15, 2024. Mr. Rogers, on behalf of the special committee, confirmed that the special committee had made the approval and recommendation of the Third Amendment to the Board, subject to the financing information requirements being approved by the Board. After discussion and deliberation, the Board, after considering the recommendation of the special committee, passed the following motions: (a) by a vote of five in favor and one against (with Mr. Jegadeesan casting such “no” vote), the Board determined that (i) the Third Amendment and the proposed third amendment terms were advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) declared it advisable to enter into the Third Amendment, and (iii) approved the execution, delivery and performance by the Company of the Third Amendment and the consummation of the transactions contemplated by the Third Amendment, and (b) by a unanimous vote in favor, resolved to approve the special committee’s financing information requirements and directed Company management to provide all information requested by the special committee in connection therewith. In voting against the approval of the Third Amendment, Mr. Jegadeesan reaffirmed his belief that Parent did not have the ability to raise the Minimum Aggregate Equity Financing to consummate the transaction and that the Company was better served by having Company management focus exclusively on other strategic alternatives for the Company, including its standalone strategy.

Prior to the opening of trading on the NYSE American on February 16, 2024, the Company filed a Current Report on Form 8-K announcing the entry into the Third Amendment by the Company, Parent and Merger Sub and summarizing the material terms of the Third Amendment.

Later on February 16, 2024, Mr. Steele had a telephone call with a representative of Party D at which such representative expressed an interest in exploring a possible transaction involving the combination of certain of the Company’s assets and investments with those of Party D. Following such discussion Mr. Steele and such representative agreed to exchange information in relation to evaluating such possible transaction.

Between February 16, 2024 and March 5, 2024, representatives of Parent provided updates to Mr. Barrett, Company management and representatives of Houlihan Lokey on the status of Parent’s equity financing for the transaction. By March 5, 2024, Parent confirmed that (a) its representatives had contacted hundreds of potential equity financing sources, including domestic and international private equity funds, family offices, placement agents, brokerage firms and retail investors, (b) it was in active discussions with approximately 10 equity financing sources representing approximately $150 million towards the Minimum Aggregate Equity Financing, and (c) it had not yet signed any subscription agreements, commitment letters or any other form of binding contract obligating such potential equity financing sources to provide the equity financing to Parent in order to provide maximum flexibility for allocations in the transaction.

On March 5, 2024, Company management delivered to the special committee all of the information representatives of Parent had provided to the Company regarding the status of Parent’s equity financing for the transaction.

On March 6, 2024, the special committee held a telephonic meeting to consider the status of Parent’s equity financing for the transaction and whether the special committee should recommend that the Board approve a termination of the Merger Agreement or continue to pursue the transaction. After discussion and deliberation, the special committee unanimously determined to recommend to the Board that the Company not terminate the Merger Agreement and continue to pursue a transaction with Parent. The special committee’s determination to make such recommendation was based on its view that, after review of the information provided by Parent and reports from Company management, Parent had made some forward progress towards obtaining the equity financing, continuing to pursue the transaction did not materially distract Company management from the Company’s day-to-day operations and its standalone plan, the Company was able to and had been investigating and pursuing other strategic alternatives, and termination of the Merger Agreement provided the Company little material benefit while eliminating the option of pursuing a transaction with Parent.

Also on March 6, 2024 Company management had a telephone call with representatives of Party D at which such representatives presented a summary of their assets and internal implied evaluation as well as their internal assessment of the Company’s assets. Company management and the representatives of Party D further discussed potential business combinations between the Company and Party D, including the contribution of certain assets by Party D to the Company and Party D making an investment in the Company.

On March 7, 2024, the Board held a telephonic meeting to, among other things, receive the special committee’s recommendation with respect to the transaction. The members of the special committee confirmed that the special committee recommended to the Board that the Company not terminate the Merger Agreement and continue to pursue a transaction with Parent and the special committee’s rationale for making such recommendation. In light of the special committee’s recommendation, the Board did not authorize a termination of the Merger Agreement and determined that the Company should continue to pursue a transaction with Parent.

Following the execution of the Third Amendment, representatives of Houlihan Lokey and members of Company management continued their outreach to potential acquirers, including parties that participated in the sale process. Between March 7, 2024 and April 10, 2024, no actionable alternative transaction proposals had been made to the Company, Houlihan Lokey, the Board or any members of Company management.

Following the meeting of the Board, later in the evening of April 10, 2024, Mr. Barrett and Mr. Steele called Mr. Mirman to inform him that the Board had determined to terminate the Merger Agreement and that a notice of such termination would be delivered to Parent in the early morning of April 11, 2024, which Mr. Mirman acknowledged.

Following the discussion between Messrs. Barrett, Steele and Mirman, Mr. Mirman contacted Mr. Barrett to discuss what terms Mr. Mirman could propose for the Board to consider rescinding its decision to terminate the Merger Agreement in the early morning of April 11, 2024. Mr. Barrett conveyed to Mr. Mirman that Mr. Mirman should contact Mr. Chang to discuss any such proposal, and that Mr. Chang would then relay that discussion to the Board for its consideration.

In the late evening of April 10, 2024, Mr. Mirman contacted Mr. Chang by telephone to present a potential revised proposal to Parent’s initial proposal for the Fourth Amendment. On that phone call, Messrs. Mirman and Chang discussed a proposal in which Mr. Mirman and other potential equity financing sources deposit an additional $2 million into the Escrow Account by the end of the business day on April 11, 2024 and, in exchange for such deposit, the Company would extend the funding deadline by five days (which we refer to such terms, collectively, as “Parent’s second proposal for the Fourth Amendment”). Mr. Chang notified Mr. Mirman that he would bring Parent’s second proposal for the Fourth Amendment to the Board and the special committee.

Following his phone call with Mr. Mirman, Mr. Chang summarized Parent’s second proposal for the Fourth Amendment to the special committee and the Board via email. A special meeting of the Board was scheduled for the early morning of April 11, 2024 to discuss Parent’s second proposal for the Fourth Amendment.

Early in the morning on April 11, 2024, the Board held a telephonic meeting to consider Parent’s second proposal for the Fourth Amendment. Mr. Steele and Mr. Barrett each described the conversation they had with Mr. Mirman following the special meeting of the Board held on April 10, 2024 and Mr. Chang described the conversation he had with Mr. Mirman regarding Parent’s second proposal for the Fourth Amendment. The Board then discussed and deliberated regarding the benefits of pursuing Parent’s second proposal for the Fourth Amendment, including the likelihood that extending the funding deadline further would result in Parent securing the equity financing required to consummate the Merger. After such discussion and deliberation, the special committee unanimously determined to recommend to the Board that the Company not terminate the Merger Agreement at this time but instead convene a special meeting following the close of business on April 11, 2024 to determine whether to enter into a fourth amendment to the Merger Agreement, otherwise continue to pursue a transaction with Parent or terminate the Merger Agreement. The Board deliberated and considered the recommendation of the special committee. Following such deliberation, the Board unanimously reversed its resolution to terminate the Merger Agreement passed the previous day and determined to pursue a potential amendment to the Merger Agreement with Parent while reserving all rights under the Merger Agreement, including the termination thereof, and applicable law.

Prior to the opening of trading on the NYSE American on April 11, 2024, the Company filed a Current Report on Form 8-K announcing that Parent had failed to deliver the Evidence of Funding by the funding deadline of 5:00 pm Central Time on April 10, 2024 and that the Board and the special committee

Following the meeting of the Board, on April 11, 2024, Mr. Steele relayed the Board’s decision to Mr. Mirman. Mr. Mirman indicated that he would not be able to deposit the $2 million into the Escrow Account by the end of the business day on April 11, 2024 as contemplated by Parent’s second proposal for the Fourth Amendment. Mr. Steele conveyed that the Board may consider a revised proposal from Parent that included an additional limited guarantee made by Mr. Mirman in favor of the Company in an amount equal to $1 million in substantially the same form as the Limited Guarantee, an additional limited guarantee made by Mr. Mirman in favor of the Company in an amount up to a maximum amount of $5 million in a modified form from the Limited Guarantee, which modifications would be a backstop by Mr. Mirman of the funding of equity financing pursuant to subscription agreements in order to consummate the transaction, and modifications to the subscription agreement to include that the commitments drawn thereunder would occur seven days prior to the anticipated meeting of the stockholders to consider the approval and adoption of the transaction.

In the early evening of April 12, 2024, representatives of Parent delivered a revised proposal to Company management and Mr. Barrett via e-mail. The material terms of such proposal were as follows: (a) the Company would not have the right to terminate the Merger Agreement in the event that Parent fails to deliver the Evidence of funding by the funding deadline of 5:00 pm Central Time on April 10, 2024 and (b) the funding of equity financing pursuant to subscription agreements in order to consummate the transaction would be effectively backstopped by an additional limited guarantee made by Mr. Mirman in favor of the Company up to a maximum amount of $5 million. (we refer to such terms, collectively, as “Parent’s third proposal for the Fourth Amendment”). Such representatives also delivered an update on Parent’s efforts to obtain Qualifying Additional Financing Documents.

Following the delivery by representatives of Parent of Parent’s third proposal for the Fourth Amendment, in the evening of April 12, 2024, the Board held a telephonic meeting to consider Parent’s third proposal for the Fourth Amendment. Mr. Steele discussed and summarized Parent’s third proposal for the Fourth Amendment and relayed to the Board that in his conversation earlier that day with Mr. Mirman, Mr. Mirman confirmed that he would not be able to fund the $2 million originally contemplated in Parent’s second proposal for the Fourth Amendment. The Board deliberated and discussed the significance of the limited guarantee contained in Parent’s third proposal for the Fourth Amendment applying to a shortfall in the funding of the equity financing, but noted that it remained unclear from Parent’s third proposal for the Fourth Amendment at that time as to how the proposed limited guarantee would be structured. Following such deliberation and discussion, the Board discussed how to proceed, including whether to proceed with terminating the Merger Agreement or instruct Company management to, and to direct Mayer Brown to, seek further information from Parent with respect to Parent’s third proposal for the Fourth Amendment. Upon a motion duly made, the Board authorized Company management to, and to direct Mayer Brown to, seek such further information from Parent.

On April 13, 2024, representatives of Mayer Brown and KLG had a telephonic meeting to discuss Parent’s third proposal for the Fourth Amendment, including the proposed structure of Mr. Mirman’s limited guarantee.

Later on April 13, 2024, KLG sent Mayer Brown and Company management proposed drafts of (a) a Fourth Amendment to the Merger Agreement (which we refer to as the “Fourth Amendment”), the material terms of which included (i) that the Company would no longer have the right to terminate the Merger Agreement in the event that Parent failed to deliver the Evidence of Funding by 5:00 pm Central Time on April 10, 2024, and (ii) the Company would have the right to terminate the Merger Agreement if Parent fails to deliver binding contracts (which we refer to as “Qualifying Additional Financing Documents”) entered into by Parent that evidence the Aggregate Minimum Financing by the earlier of a to-be-determined date in April 2024 or the date that the Company causes the definitive proxy statement in connection with the Mergers to be mailed to the Company’s stockholders, (b) a Limited Guarantee (which we refer to as the “Funding Limited Guarantee”) proposed to be entered into between the Company and Mr. Mirman, pursuant to which Mr. Mirman would irrevocably and unconditionally guarantee to the Company, solely in

Also on May 13, 2024, Mr. Steele requested an update from Parent on the status of Parent’s discussions with each of Fortress and Meritz in respect of their debt commitments, including a possible reduction in their respective requirements regarding the amount of cash on the Company’s balance sheet following the consummation of the Merger in light of the Company’s ongoing financing needs. Mr. Mirman relayed an update he had received from Fortress that they were amenable to waiving such requirements and provided Mr. Mirman an update on Parent’s efforts to obtain the equity financing for the Merger.

On May 14, 2024, the Board held a telephonic meeting at which all of the members of the Board were present. Mr. Steele provided an update on ongoing discussions with Party D. Mr. Steele further provided an update on Parent’s discussions with each of Fortress and Meritz to reduce their respective requirements regarding the amount of cash on the Company’s balance sheet following the consummation of the Merger and relayed the updates he had received from Mr. Mirman regarding Parent’s efforts to obtain the equity financing for the Merger contemplated by the transaction documents. The Board then discussed a potential termination of the Merger Agreement in light of Parent’s efforts and the ongoing resources being expended by Company management and other employees of the Company in furtherance of the transaction. Following such discussions, the Board determined that the Company should continue to pursue a potential transaction with Parent and instructed Company management to continue to engage with Parent, including requesting that Parent to provide a copy of any subscription agreements with Meritz for it to provide equity financing with respect to the transaction, executed copies of any amendments to the debt commitment letters of each of Fortress and Meritz evidencing a reduction of their respective requirements regarding the amount of cash on the Company’s balance sheet following the consummation of the Merger, and any additional executed subscription agreements providing for equity financing in respect of the transaction.

On May 15, 2024, the Company filed a Current Report on Form 8-K announcing that the Company was continuing its review of strategic alternatives and working towards consummating the Merger.

On May 21, 2024, Messrs. Steele and Barrett met with a representative of Party D to further discuss a possible business combination involving the Company and Party D.

On May 23, 2024, Company management instructed Mayer Brown to confirm with KLG whether Parent was amenable to entering into an amendment to the Merger Agreement to extend the outside date given that the outside date of June 12, 2024 under the Merger Agreement.

Later on May 23, 2024, Mayer Brown requested that KLG confirm whether Parent was amenable to an extension of the outside date, and KLG confirmed that Parent was amenable to such an extension, which Mayer Brown relayed to Company management.

In early June 2024, a representative of Party AB contacted Mr. Steele to notify Mr. Steele that Party AB was considering strategic alternatives.

On June 3, 2024, Party AA executed a confidentiality agreement with the Company, which contained customary provisions, but did not include standstill provisions that would prohibit Party AA, without the prior written consent of the Board, from participating in a proposal for the Company either publicly or privately or from asking the Company to amend or waive such standstill provisions (often referred to as a “don’t ask, don’t waive” provision).

On June 4, 2024, Company management met with representatives of Party AA to provide an overview of the Company. At such meeting, Party AA expressed an interest in exploring an acquisition of (and only of) a certain portion of the Company’s assets rather than making proposals to acquire the Company. Following such meeting, Company management provided Party AA with certain due diligence information regarding the Company’s operations.

Later on June 4, 2024, Mr. Mayer called Ms. Fuchs to discuss the outside date under the Merger Agreement being June 12, 2024, and a potential extension thereof.

On July 7, 2024, Mr. Mirman contacted Mr. Barrett to discuss the possibility of modifying the terms of the Parent preferred stock transactions such that all of Significant Stockholders (including Gen IV, which was not participating in the rollover at that time) would rollover all of their Company preferred stock (rather than the partial rollover contemplated in the initial transaction terms) in the proposed transaction. Mr. Barrett noted during this discussion that each Significant Stockholder would need to consent individually to the rollover of all of their Company preferred stock.

On July 12, 2024, Mr. Mirman and Mr. Barrett discussed modifications to certain terms of the proposed transaction as they related to the Significant Stockholders, including the modifications to the rollover terms they discussed in their prior conversations, governance rights associated with the Parent preferred stock and the sources and uses of Parent’s anticipated financing for the proposed transaction. This discussion included a proposal from Mr. Mirman to reduce the Merger Consideration from $9.80 per share to $7.00 per share, which reduction, when taken together with the modifications to the rollover terms to include all of the Significant Stockholders rolling over all of their shares of Company preferred stock in the transaction, would facilitate Parent’s ability to consummate the Merger due to Parent’s inability to otherwise obtain sufficient financing to consummate the Merger on the terms of the Merger Agreement as of December 14, 2023. As part of this discussion, Mr. Barrett directed all conversations regarding the terms relating to the Company common stock to be held between Parent and Company. In the following days, Mr. Mirman, Ms. Fuchs and Mr. Barrett continued to discuss potential modifications to the terms of the proposed transactions and of the Parent preferred stock, including the need for Parent to formally submit a revised proposal and transaction documentation for consideration for the Board. Mr. Barrett suggested Mr. Mirman engage with each of the holders of Company preferred stock regarding such terms. Mr. Barrett communicated these conversations to Mr. Steele and the other holders of Company preferred stock.

On July 17, 2024, representatives of Party AB and Company management had a telephonic meeting to discuss a potential business combination and due diligence information regarding the valuation of each party.

On July 18, 2024, the Board held a telephonic meeting at which all of the members of the Board were present to, among other things, review the ongoing status of the potential transaction with Parent and discussions between Company management and each of Party D, Party AA and Party AB. As part of such review, Mr. Steele relayed the discussions he had with Parent regarding the challenges Parent was facing in obtaining fully committed financing on the terms contemplated by the Merger Agreement and, in light of such challenges, potentially amending the Merger Agreement to reduce the purchase price of $9.80 per share to $7.00 per share and amending the mechanics and economics of the Parent preferred stock investment and rollover transactions, in each case, with the purpose of resulting in Parent having sufficient financing sources to consummate the Merger. Mr. Steele confirmed that Company management had not received a formal written proposal from Parent in connection with these discussions.

Later on July 18, 2024, Ms. Fuchs sent Mr. Barrett and Mr. Steele a summary of potential revised terms for the transactions, which included a reduction in the Merger Consideration to $7.00 per share, revised drafts of certain of the documents governing the rollover and the Parent preferred stock, as well as a detailed plan for the sources and uses of Parent’s financing for the transaction that contemplated (a) a reduction in the Minimum Aggregate Equity Financing from $200,000,000 to $160,000,000 and (b) all of the Significant Stockholders rolling over all of their shares of Company preferred stock in the transaction.

On July 23, 2024, Ms. Fuchs and Mr. Steele discussed elements of Parent’s informal revised proposal delivered by Parent on July 18, 2024, including the amount of committed financing that Parent has obtained and the effect of the rollover.

On July 25, 2024, Mr. Steele called a representative of Party AA to discuss Party AA’s interest in making a written proposal in respect of a possible business combination with the Company. Such representative informed Mr. Steele that Party AA was still in process of its due diligence review of the Company and was not yet prepared to make an offer.

On September 12, 2024, Mr. Mayer sent the draft documents for the Seventh Amendment to Ms. Fuchs.

In evaluating the Merger, the special committee and the Board considered a range of factors that supported their decision to approve the Merger Agreement and the Merger, including those set forth below (which are not necessarily in order of relative importance):

The foregoing discussion of the information and factors considered by the special committee and the Board is not exhaustive but is intended to reflect the material factors considered by them in their consideration of the Merger Agreement and the transactions contemplated thereby, including the Merger. In view of the complexity and the large number of factors considered, the special committee and the Board, individually and collectively, did not quantify or assign any relative or specific weight to the various factors. Rather, the Board based its recommendation to the holders of Company common stock on the totality of the information presented to and considered by it. In addition, individual members of the special committee and the Board may have given different weights to different factors.

The foregoing discussion of the information and factors considered by the Board is forward-looking in nature. This information should be read in light of the factors described under the caption “Cautionary Statement Concerning Forward-Looking Statements.”

The special committee and the Board believe that sufficient procedural safeguards were and are present to ensure the fairness of the Merger and to permit the special committee and the Board to represent effectively the interests of the unaffiliated stockholders. These procedural safeguards include the following:

Houlihan Lokey relied upon and assumed, without independent verification, that (a) the representations and warranties of all parties to the agreements identified in item 1 above and all other related documents and instruments that are referred to therein are true and correct, (b) each party to all such agreements and such other related documents and instruments will fully and timely perform all of the covenants and agreements required to be performed by such party, (c) all conditions to the consummation of the Merger will be satisfied without waiver thereof, and (d) the Merger will be consummated in a timely manner in accordance with the terms described in all such agreements and such other related documents and instruments, without any additional amendments or modifications thereto. Houlihan Lokey relied upon and assumed, without independent verification, that (i) the Merger will be consummated in a manner that complies in all respects with all applicable foreign, federal and state statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the Merger will be obtained and that no delay, limitations, restrictions or conditions will be imposed or additional amendments, modifications or waivers made that would have an effect on the Merger or the Company that would be material to Houlihan Lokey’s analyses or its opinion. Houlihan Lokey relied upon and assumed, without independent verification, at the direction of the Company, that any adjustments to the Merger Consideration pursuant to the Amended Agreement will not be material to Houlihan Lokey’s analyses or its opinion. In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final forms of any draft documents identified above would not differ in any respect from the drafts of said documents.

Furthermore, in connection with its opinion, Houlihan Lokey was not requested to make, and did not make, any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of the Company or any other party, nor was Houlihan Lokey provided with any such appraisal or evaluation (other than with respect to the Reserve Information). Houlihan Lokey did not estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey undertook no independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company is or may be a party or is or may be subject.

Houlihan Lokey’s opinion was furnished for the use of the Board (in its capacity as such) in connection with its evaluation of the Merger and may not be used for any other purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey’s opinion was not intended to be, and does not constitute, a recommendation

The selected transactions, Adjusted EBIDA multiples and resulting low, high, median and mean financial data were:

Houlihan Lokey and certain of its affiliates have in the past provided and are currently providing investment banking, financial advisory and/or other financial or consulting services to Oaktree Capital Management, L.P. (“Oaktree”), an affiliate of Brookfield Corporation (“Brookfield”), or one or more security holders or affiliates of, and/or portfolio companies of investment funds affiliated or associated with, Oaktree and/or Brookfield (collectively, with Oaktree and Brookfield, the “Oaktree/Brookfield Group”), for which Houlihan Lokey and its affiliates have received, and may receive, compensation, including, among other things, (i) having acted as financial advisor to the special committee of the board of directors of Oaktree Specialty Lending Corporation, currently managed by a member of the Oaktree/Brookfield Group, in connection with its merger transaction with Oaktree Strategic Income II, Inc., which closed in January 2023, (ii) having acted as financial advisor to a lender group, of which one or more members of the Oaktree/Brookfield Group were members, in relation to their interests as lenders to Samarco Mineração S.A. in connection with its restructuring transaction, which was completed in December 2023, (iii) having acted as financial advisor to a lender group, of which one or more members of the Oaktree/Brookfield Group were members, in relation to their interests as lenders to SiO2 Medical Products, Inc. in connection with its chapter 11 bankruptcy proceedings, which concluded in September 2023, (iv) having acted as financial advisor to a lender group, of which one or more members of the Oaktree/Brookfield Group were members, in relation to their interests as lenders to CURO Group Holdings Corp. in connection with its chapter 11 bankruptcy proceedings, which concluded in May 2024, (v) having acted as investment banker to Salem Harbor Power Development LP, then a member of the Oaktree/Brookfield Group, in connection with its chapter 11 bankruptcy proceedings, which concluded in August 2023, (vi) having acted as exclusive placement agent to Oaktree in connection with its financing of Electro Rent Corporation, which closed in December 2023, (vii) having acted as financial advisor to members of the Oaktree/Brookfield Group in connection with the acquisition of Aqseptence Group, which closed in November 2023, (viii) having acted as financial advisor to Aludyne, Inc., a member of the Oaktree/Brookfield Group, in connection with its refinancing transaction, which closed in March 2023 and another transaction which closed in April 2024, (ix) having acted as financial advisor to David’s Bridal, then a member of the Oaktree/Brookfield Group, in connection with its chapter 11 bankruptcy proceedings, which concluded in July 2023, (x) having acted as financial advisor to Ascot Lloyd, then a member of the Oaktree/Brookfield Group, in connection with its sale transaction, which closed in October 2022, (xi) having acted as financial advisor to Cardone Industries, then a member of the Oaktree/Brookfield Group, in connection with its sale transaction, which closed in June 2023, (xii) having acted as financial advisor to Unavets Group, a member of the Oaktree/Brookfield Group, in connection with a financing transaction, which closed in November 2022, and (xiii) having acted as financial advisor to LifeFit Group, a member of the Oaktree/Brookfield Group, in connection with its pending sale transaction. Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other financial or consulting services to the Company, the Parent, members of the Oaktree/Brookfield Group, other participants in the Transaction or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of our and their respective employees may have committed to invest in private equity or other investment funds managed or advised by Oaktree, Brookfield, other participants in the Transaction or certain of their respective affiliates or security holders, and in portfolio companies of such funds, and may have co-invested with members of the Oaktree/Brookfield Group, other participants in the Transaction or certain of their respective affiliates or security holders, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar matters, Houlihan Lokey and certain of its affiliates have in the past acted, are currently acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, the Company, Parent, members of the Oaktree/Brookfield Group, other participants in the Merger or certain of their respective affiliates or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation.

In connection with the revised Contribution Agreement, the Series A Preferred Stock Purchase Agreement between Luminus, Oaktree, Lion Point Master, LP and Parent was terminated.

Parent has obtained financing commitments pursuant to the debt commitment letters, for purposes of the debt financing. Meritz and Fortress have each committed to provide Parent with debt financing in the principal amount of $100 million for an aggregate commitment of $200 million on the terms and conditions set forth in the debt commitment letters, consisting a senior secured first lien term loan facility. The obligations of each of Meritz and Fortress to provide the debt financing under the debt commitment letters are subject to a number of conditions, including the consummation of the Merger, receipt of executed loan documentation, the accuracy of certain specified representations and warranties, the consummation of the Parent Preferred Stock Transactions and other customary closing conditions for financings of this type. As of the last practicable date before the printing of this proxy statement, the debt commitment letters remain in effect, and Parent has not notified the Company of any plans to utilize financing in lieu of the