UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

___________________

SCHEDULE 14A

___________________

Proxy Statement Pursuant to Section 14(a) 
of the Securities Exchange Act of 1934

Check the appropriate box:

Steel Connect, Inc.
(Name of Registrant as Specified in Its Charter)

_____________________________________________________________________________________________________

(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

STEEL CONNECT, INC.

2000 MIDWAY LANE
SMYRNA, TENNESSEE 37167

MERGER PROPOSAL — YOUR VOTE IS VERY IMPORTANT

August 22, 2022

Dear Steel Connect, Inc. Stockholder:

You are cordially invited to attend the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of Steel Connect, Inc. (“Steel Connect” or the “Company”), which will be held 12:00 p.m., Eastern Time, on September 30, 2022. The Annual Meeting will be held in a virtual-only meeting format. You will not be able to attend the Annual Meeting in person. You can virtually attend the Annual Meeting at www.virtualshareholdermeeting.com/STCN2021, where you will be able to vote electronically and submit questions during the Annual Meeting. For more information, see “Questions and Answers About the Annual Meeting and the Merger.”

At the Annual Meeting, you will be asked to consider and vote upon a proposal (the “Merger Proposal”) to adopt an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of June 12, 2022, by and among the Company, Steel Partners Holdings L.P., a Delaware limited partnership (“Parent”), and SP Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub” and, together with Parent, the “Parent Parties”), pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving entity and becoming a wholly owned subsidiary of Parent (the “Merger”). At the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock (“Common Stock”) (other than (i) shares owned by the Company or any of its wholly owned subsidiaries or by Parent or any of its wholly owned subsidiaries (collectively, “Excluded Shares”) and (ii) shares for which appraisal rights have been properly and validly perfected and not withdrawn or lost (“Dissenting Shares”)) will be converted into the right to receive (a) $1.35 in cash, without interest and subject to any withholding taxes (the “Per Share Cash Merger Consideration”), and (b) one contingent value right to receive, subject to the terms of the ModusLink CVR Agreement (as defined in the accompanying proxy statement), the ModusLink CVR Payment Amount as provided for in the Merger Agreement (such right, a “ModusLink CVR” and, together with the Per Share Cash Merger Consideration, the “Per Share Merger Consideration”). The Per Share Cash Merger Consideration represents (i) a premium of approximately 90.1% over the closing price of the shares of Common Stock of $0.71 on November 19, 2020, the last trading day prior to the public disclosure that Parent had delivered a non-binding expression of interest regarding a potential combination of the Company and Parent for consideration consisting of cash and units of Parent’s 6% Series A Preferred Units that would imply a value per share of Common Stock in the range of $0.65 to $0.72, (ii) a premium of approximately 11.6% over the closing price of the shares of Common Stock of $1.21 on June 10, 2022, the last trading day prior to the public announcement of the Merger, and (iii) a premium of approximately 9.3% over the 30 trading-day average closing price of the shares of Common Stock as of June 10, 2022, the last trading day prior to the public announcement of the Merger Agreement.

The Merger is a “going private” transaction under the rules of the Securities and Exchange Commission (the “SEC”). In connection with the Merger Agreement, the Company and certain stockholders of the Company entered into a Voting and Support Agreement, dated as of June 12, 2022 (the “Support Agreement”). Pursuant to the terms and conditions set forth in the Support Agreement, each stockholder signatory thereto has agreed to vote, or cause to be voted, all shares of Common Stock and Series C Preferred Stock, par value $0.01 per share, of the Company (“Series C Preferred Stock”) beneficially owned by such persons at the Annual Meeting, among other matters, for the approval and adoption of the Merger Agreement.

To assist in evaluating the fairness of the Merger to the Company and our stockholders other than the holders of Excluded Shares and any “affiliate” (within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the holders of Excluded Shares (referred to collectively as the “Parent Group”), the board of directors of the Company (the “Board”) formed a special committee (the “Special Committee”) of

independent and disinterested directors to consider and negotiate the terms and conditions of the Merger and to make a recommendation to the Board. The Special Committee unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated by the Merger Agreement (such transactions, including the Merger, collectively, the “Transactions”) are fair to and in the best interests of the Company and the holders of capital stock of the Company (other than holders of Excluded Shares), (ii) recommended to the Board that the Board adopt resolutions approving, adopting and declaring advisable the Merger Agreement and the Transactions and (iii) recommended to the Board that the Board recommend that holders of the capital stock entitled to vote, vote for the adoption of the Merger Agreement.

After carefully considering the unanimous recommendation of the Special Committee and other factors, the Board, acting on the unanimous recommendation of the Special Committee, approved the Merger Agreement and the Transactions and adopted resolutions (i) determining that the terms of the Merger Agreement and the Transactions are fair to and in the best interest of the Company and the holders of capital stock of the Company (other than holders of Excluded Shares), (ii) approving and declaring advisable the Merger Agreement and the Transactions and (iii) recommending that the holders of capital stock of the Company entitled to vote, vote for the adoption of the Merger Agreement.

At the Annual Meeting, Steel Connect stockholders will also be asked to vote on several other proposals, including the approval of an amendment to the Company’s Restated Certificate of Incorporation to clarify that the Merger and the Transactions do not constitute a “Liquidation Event” under the Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock of the Company (the “Amendment Proposal”); the election of directors (the “Election Proposal”); the ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the current fiscal year (the “Auditor Ratification Proposal”); and the approval of a proposal to the adjourn or postpone the Annual Meeting in order to take such actions as the Board determines are necessary or appropriate, including to ensure that any necessary supplement or amendment to the proxy statement accompanying this notice is provided to the Company’s stockholders a reasonable amount of time in advance of the Annual Meeting or to solicit additional proxies if there are insufficient votes at the time of the Annual Meeting to approve the proposal to adopt the Merger Agreement (the “Adjournment Proposal”).

The Board unanimously recommends that you vote “FOR” the Merger Proposal, “FOR” the Amendment Proposal, “FOR” the Adjournment Proposal and “FOR” the other proposals to be submitted to the stockholders at the Annual Meeting.

The enclosed proxy statement describes the Merger Agreement, the Merger and related agreements, including the ModusLink CVR Agreement and the Support Agreement. It also provides specific information concerning the Annual Meeting. In addition, you may obtain information about us from documents filed with the SEC. You should read this entire proxy statement carefully and, whether or not you plan to virtually attend the Annual Meeting, to promptly submit a proxy: (a) by telephone or the Internet following the easy instructions on the enclosed proxy card; or (b) if you have requested or received a paper copy of the proxy materials, by signing, dating and returning in the enclosed postage-paid envelope the enclosed proxy card (if you are a stockholder of record) or voting instruction form (if you own shares of common stock in “street name,” i.e., through a bank, broker or other nominee).

Your vote is important to us, regardless of whether or not you plan to attend the Annual Meeting. The Merger cannot be completed unless the Merger Agreement is adopted by the affirmative vote of the holders of (i) a majority of the outstanding shares of Series C Preferred Stock, (ii) a majority in voting power of the outstanding shares of Common Stock and Series C Preferred Stock (voting on an as converted to shares of Common Stock basis), voting together as a single class, and (iii) a majority of the outstanding shares of Common Stock not owned, directly or indirectly, by the Parent Parties, any other officers or directors of the Company or any other person having any equity interest in, or any right to acquire any equity interest in, Merger Sub or any person of which Merger Sub is a direct or indirect subsidiary. If you fail to vote on the Merger Agreement, the effect will be the same as a vote against adoption of the Merger Agreement.

To be admitted to the Annual Meeting at the link provided above, you must enter the control number found on your proxy card (if you are a stockholder of record) or voting instruction form (if you own shares of Common Stock in street name). You may vote at the Annual Meeting by following the instructions available on the Annual Meeting website during the Annual Meeting. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote and submit your proxy in advance of the Annual Meeting by one of the methods described in the

proxy materials for the Annual Meeting. Therefore, we encourage you to promptly submit your proxy to vote via the Internet, by telephone or, if you have requested or received a paper copy of the proxy materials, by signing, dating and returning the completed proxy card or voting instruction form as applicable. Voting by any of these methods will ensure your representation at the Annual Meeting.

Neither the SEC nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the merits or fairness of the Merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

This proxy statement is dated August 22, 2022 and, together with the enclosed form of proxy, is first being mailed to stockholders on or about August 24, 2022.

STEEL CONNECT, INC.

2000 MIDWAY LANE
SMYRNA, TENNESSEE 37167

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON SEPTEMBER 30, 2022

To the Stockholders of Steel Connect, Inc.:

NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of Steel Connect, Inc. (the “Company”) will be held on September 30, 2022 at 12:00 p.m., Eastern Time. The Annual Meeting will be held in a virtual-only meeting format. You will not be able to attend the Annual Meeting in person. You can virtually attend the Annual Meeting at www.virtualshareholdermeeting.com/STCN2021, where you will be able to vote electronically and submit questions during the Annual Meeting. For more information, see “Questions and Answers About the Annual Meeting and the Merger.”

The Annual Meeting will be held for the following purposes:

1.      The Merger Proposal: to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of June 12, 2022 (as it may be amended from time to time, the “Merger Agreement”), by and among the Company, Steel Partners Holdings L.P., a Delaware limited partnership (“Parent”), and SP Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub” and, together with Parent, the “Parent Parties”);

2.      The Amendment Proposal: to approve an amendment to the Company’s Restated Certificate of Incorporation (the “Certificate of Incorporation”) by inserting a new section into the Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock of the Corporation filed with the Secretary of State of the State of Delaware on December 15, 2017 (the “Certificate of Designations”) to clarify that the Merger and the transactions contemplated by the Merger do not constitute a “Liquidation Event” under the Certificate of Designations;

3.      The Election Proposal: to elect two directors to serve in Class I until the 2024 Annual Meeting of Stockholders (to be held after the fiscal year ending July 31, 2024) and until their respective successors are duly elected and qualified;

4.      The Say-on-Pay Proposal: to approve, on an advisory basis, the compensation of our Named Executive Officers (as defined by Item 402 of Regulation S-K);

5.      The Auditor Ratification Proposal: to ratify the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the current fiscal year;

6.      The Adjournment Proposal: to approve the adjournment of the Annual Meeting, if necessary, to ensure that any necessary supplement or amendment to the proxy statement accompanying this notice is provided to the Company’s stockholders a reasonable amount of time in advance of the Annual Meeting or to solicit additional proxies if there are insufficient votes at the time of the Annual Meeting to approve adoption of the Merger Agreement; and

7.      to transact such other business that may properly come before the Annual Meeting or any adjournment or postponement thereof.

The board of directors of the Company (the “Board”), acting on the unanimous recommendation of the special committee of the Board (the “Special Committee”), has approved the Merger Agreement and the transactions contemplated by the Merger Agreement (such transactions collectively, the “Transactions”) and has determined that the Merger Agreement and the Merger and the Transactions are advisable, fair to and in the best interest of the Company and the holders of capital stock of the Company (other than the Parent Parties and any “affiliate” (within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of any of

the Parent Parties (referred to collectively as the “Parent Group”)). The Board unanimously recommends that you vote “FOR” the Merger Proposal, “FOR” the Amendment Proposal “FOR” the Adjournment Proposal, and “FOR” the other proposals to be submitted to the stockholders at the Annual Meeting.

Your vote is very important, regardless of the number of shares of common stock of the Company (“Common Stock”), that you own, or whether or not you plan to attend the Annual Meeting. The Merger cannot be completed unless the Merger Agreement is adopted by the affirmative vote of the holders of (i) a majority of the outstanding shares of Series C Preferred Stock, (ii) a majority in voting power of the outstanding shares of Common Stock and Series C Preferred Stock (voting on an as converted to shares of Common Stock basis), voting together as a single class, and (iii) a majority of the outstanding shares of Common Stock not owned, directly or indirectly, by the Parent Parties, any other officers or directors of the Company or any other person having any equity interest in, or any right to acquire any equity interest in, Merger Sub or any person of which Merger Sub is a direct or indirect subsidiary. If you fail to vote on the Merger Agreement, the effect will be the same as a vote against adoption of the Merger Agreement.

The Merger is described in the accompanying proxy statement, which we encourage you to read carefully. A copy of the Merger Agreement is included as Annex A to the accompanying proxy statement.

Stockholders who do not vote in favor of the Merger Proposal and who object in writing to the Merger prior to the Annual Meeting and comply with all of the applicable requirements of Delaware law, which are summarized in the section entitled “Special Factors — Rights of Appraisal” in the accompanying proxy statement and reproduced in its entirety as Annex E to this proxy statement, will be entitled to rights of appraisal to obtain the fair value of their shares of Common Stock.

We encourage you to participate in the Annual Meeting, either by attending virtually and voting electronically at the Annual Meeting or by voting online or by telephone or, if you have received or requested a paper copy of the proxy materials, by completing, dating, signing and promptly returning the enclosed proxy card (if you are a stockholder of record) or voting instruction card (if you own shares of Common Stock in “street name,” i.e., through a bank, broker or other nominee) in the enclosed postage-paid envelope before the Annual Meeting. This will ensure that your shares are represented at the Annual Meeting.

A list of the names of stockholders entitled to vote at the Annual Meeting will be available during the Annual Meeting for examination by any stockholder at www.virtualshareholdermeeting.com/STCN2021.

TABLE OF CONTENTS

SPECIAL FACTORS

Background of the Merger

The following chronology summarizes key events and contacts that led to the signing of the Merger Agreement. This chronology does not purport to catalogue every conversation among the Special Committee, members of our management or the Special Committee’s representatives and other parties with respect to the Merger.

Prior to February 11, 2013, Parent and certain of its affiliates began to purchase shares of Common Stock in the open market for investment purposes. On February 11, 2013, the Company and Parent entered into an Investment Agreement pursuant to which Parent invested $30,000,000 into the Company in exchange for 7,500,000 shares of Common Stock and warrants to purchase up to 2,000,000 shares of Common Stock. After the issuance of these shares, Parent and its affiliates owned approximately 29.99% of the outstanding shares of the Company.

On December 15, 2017, the Company entered into a Preferred Stock Purchase Agreement with SPH Group Holdings LLC, an affiliate of Parent, pursuant to which the Company issued 35,000 shares of Series C Preferred Stock to SPH Group Holdings LLC for an aggregate purchase consideration of $35.0 million and the Company repurchased the warrant for $100 and terminated the warrant. The Company used a portion of these funds to complete its acquisition of IWCO Direct Holdings Inc. After the issuance of these shares, Parent and its affiliates owned approximately 52.3% of the outstanding shares of the Company.

On February 27, 2018, the Company changed its name from ModusLink Global Solutions, Inc. to “Steel Connect, Inc.”

As part of the continuous evaluation of our businesses and plans, the Board and senior management regularly consider a variety of potential strategic options and transactions, all in a continued effort to enhance stockholder value. Since the acquisition of IWCO, in view of industry and market conditions, our business and financial performance and the relatively limited trading volume of our stock, the Board focused on and considered potential strategic alternatives presented or available to us, as well as the opportunities and risks associated with our continuing to operate as an independent company.

In August 2018, the Company engaged a financial advisor to assist in the potential sale of ModusLink including identifying, evaluating and contacting potential purchasers with respect to such a sale (the “ModusLink Sale Process”). Starting in January 2019, the financial advisor reached out to approximately 230 potential strategic and financial buyers for ModusLink. This process resulted in seven indications of interest (two from potential strategic buyers and five from potential financial buyers), in addition to informal interest from an eighth potential buyer (“Company X”) that was interested in only acquiring a portion of the ModusLink business. Company X, a strategic party, was advised that the Company was not interested in divesting only a portion of ModusLink at that time. After performing further due diligence, the potential strategic buyers (aside from Company X) withdrew from the ModusLink Sale Process and three of the potential financial buyers submitted letters of intent. The letters of intent were based on valuations of $20 million and below, which the Company determined to be insufficient. The Company then abandoned the ModusLink Sale Process and the financial advisor was authorized to ask Company X to submit a proposal for evaluation. The Company and Company X remained in periodic contact thereafter; however, Company X did not submit a transaction proposal until its indication of interest discussed below.

On February 28, 2019, the Company borrowed $14.9 million from SPH Group Holdings LLC in exchange for a 7.50% Convertible Senior Note due 2024 in connection with a refinancing transaction to refinance the Company’s then-outstanding 5.25% Convertible Senior Notes due 2019 that were then held by SPH Group Holdings LLC.

On June 7, 2019, Company X submitted a proposal to acquire four of ModusLink’s facilities for $50 million. After performing further diligence and preliminary negotiations, Company X submitted a revised proposal on July 18, 2019 to acquire seven ModusLink facilities for $50 million. After additional negotiations, Company X submitted a further revised proposal on September 29, 2019 to acquire 13 ModusLink facilities for $50 million, together with the assumption by Company X of 50% of the costs associated with shutting down ModusLink’s Waltham facility. Over the course of the following several months, negotiations continued regarding the purchase price and potential deal structure. However, the restrictions on travel due to the onset of the COVID-19 pandemic halted the negotiations in March 2020.

In late January and early February 2020, the Company instructed the financial advisor from the ModusLink Sale Process to again seek to market ModusLink. The financial advisor contacted over 20 potential buyers, including parties that submitted indications of interest during the 2019 ModusLink Sale Process. However, this effort resulted in no written offers.

Over the course of 2019, 2020 and 2021, the Company also received several inbound inquiries about a potential transaction involving ModusLink. However, none of these inquiries resulted in formal proposals or progressed beyond preliminary discussions.

On November 19, 2020, Warren G. Lichtenstein delivered a letter on behalf of Parent to the Board setting forth a non-binding proposal to acquire all of the shares of Common Stock not already owned by Parent or its affiliates for a combination of cash and Parent’s 6% Series A Preferred Units, implying a value per share of Common Stock in the range of $0.65 to $0.72 per share (the “Initial Proposal”). The letter further stated that Parent expected that the proposed transaction would be considered by a special committee of independent directors of the Company, who would retain independent legal and financial advisors to assist it in reviewing, evaluating, considering, negotiating and approving or disapproving the Initial Proposal.

The letter stated that the proposed transaction would be conditioned on the approval of the stockholders holding at least a majority of all the issued and outstanding shares of Common Stock not held by Parent, its affiliates or senior management or their respective affiliates, and that Parent would not be willing to move forward with the proposed transaction unless it was approved by the special committee and a majority of the outstanding shares of Common Stock other than shares of Common Stock held by Parent or its affiliates. The letter also informed the Board that the ongoing relationship between the Company and Parent and its affiliates would not be adversely affected if the Special Committee or a majority of the minority stockholders of the Company were to decline or fail to approve the proposed transaction. The letter also stated that Parent and its affiliates intended to remain long-term stockholders of Company and, thus, would not expect, in their capacities as stockholders of the Company, to vote in favor of any alternative sale, merger or other extraordinary corporate transaction involving the Company.

On November 19, 2020, Parent filed the letter setting forth the Initial Proposal with the SEC in an amendment to its beneficial ownership report on Schedule 13D. The closing price of the shares of Common Stock on Nasdaq on November 19, 2020 was $0.71.

On November 20, 2020, the Board held a meeting to discuss the Initial Proposal. After discussion and deliberation, the Board resolved to establish a special committee (the “Special Committee”) of independent and disinterested directors, to be comprised of Maria U. Molland and Renata Simril, to consider the Initial Proposal and any alternatives to the Initial Proposal.

The Board further resolved to delegate to the Special Committee the power and authority, among other matters, to engage in discussions and/or negotiations relating to all terms and conditions of the potential transaction with Parent, to consider and review potential alternative strategies or transactions, to select and retain, at the Company’s expense, such independent financial advisors, legal counsel and other advisors as it deemed appropriate, and to make any recommendations to the Board that the Special Committee deemed appropriate. The Board further resolved that it would not approve or recommend to the stockholders of the Company a transaction with Parent or any alternative transactions without the prior favorable recommendation of the Special Committee.

On November 20, 2020, the Special Committee held a meeting to discuss, among other matters, the process for selecting legal counsel to advise the Special Committee. At this meeting, the Special Committee appointed Ms. Molland to act as chair of the Special Committee. Following the meeting, members of the Special Committee contacted a number of law firms for consideration as potential legal counsel to the Special Committee.

On November 21, 2020, the Special Committee met to discuss their review of the law firms. After discussion and deliberation, the Special Committee approved the selection of Dentons US LLP (“Dentons”) as legal counsel to the Special Committee. The Special Committee selected Dentons after confirmation that Dentons US LLP had no conflicting relationships with Parent or the Company and based, in part, on its experience representing special committees in circumstances similar to that of the Special Committee. Shortly thereafter, the Special Committee provided to Dentons an executed engagement letter formalizing Dentons’ engagement as legal counsel to the Special Committee.

On November 28, 2020, the Special Committee held a meeting with representatives of Dentons in attendance. The representatives of Dentons reviewed with the Special Committee various legal matters, including the fiduciary duties of directors in the context of a potential “going-private” transaction with a controlling stockholder and the Special Committee’s role, mandate and powers. The Special Committee discussed the importance of engaging an independent financial advisor and identified eight potential advisors having the relevant experience to represent the Special Committee as financial advisor, and the protocol for inviting each to make a proposal to the Special Committee with respect to the potential representation. This protocol included asking each potential financial advisor to identify any potential sources of conflicts that may arise from any relationships between the financial advisor and the Company or Parent or its affiliates. The Special Committee and representatives of Dentons agreed to coordinate contacting potential financial advisors and to work towards scheduling a series of financial advisor presentations and interviews.

Between November 28, 2020 and December 27, 2020, the Special Committee met with five potential financial advisors and discussed their qualifications and fee proposals. Certain potential financial advisors were eliminated and the Special Committee narrowed its selection to two potential advisors that the Special Committee determined to be qualified and free from any conflicts that would prevent them from acting as independent financial advisor to the Special Committee.

On December 27, 2020, the Special Committee held a meeting with representatives of Dentons in attendance. The representatives of Dentons reviewed with the Special Committee various legal matters, including the fiduciary duties of directors in the context of a potential “going-private” transaction with a controlling stockholder and the Special Committee’s role, mandate and powers. The members of the Special Committee then discussed the current discussions with potential financial advisors and, following these discussions and based on Houlihan Lokey’s qualifications, expertise in representing special committees in similar transactions and reputation, the Special Committee determined it would seek to engage Houlihan Lokey, subject to the negotiation of an acceptable engagement letter.

On January 4, 2021, the Special Committee, the Company and Houlihan Lokey entered into an engagement letter providing for the engagement of Houlihan Lokey as financial advisor to the Special Committee. The terms of such engagement are described in more detail in the section entitled “Special Factors — Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee.”

On January 6, 2021, the Special Committee, along with representatives from Dentons and Houlihan Lokey, met to discuss the process by which Houlihan Lokey would gather information from the Company and to discuss a preliminary timeline for evaluating the Initial Proposal.

During the months of January, February and March of 2021, representatives of Houlihan Lokey met with representatives of Imperial Capital, LLC, Parent’s financial advisor (“Imperial Capital”), on several occasions to discuss the Initial Proposal. Houlihan Lokey had been provided with projections prepared by ModusLink management and reviewed and approved by the Special Committee for the ModusLink business unit, but had not been provided projections for IWCO. Company management conveyed the challenges it faced in finalizing projections for IWCO given ongoing challenges in the IWCO business.

Imperial Capital was engaged by Parent to serve as an intermediary with the Special Committee’s financial advisors. Imperial Capital is a full-service investment bank, founded in 1997, offering an integrated platform of services to institutional investors and middle market companies. It offers a range of investment banking services including debt and equity financings, mergers and acquisitions, restructuring, and other advisory services to middle market corporate clients in the United States. Parent selected Imperial Capital as its financial advisor based upon Imperial Capital’s expertise in mergers and acquisitions, as well as Imperial Capital’s familiarity with Parent. Pursuant to its engagement by Parent, Imperial Capital is entitled to a fee of $500,000 for its services, payable subject to and upon consummation of the Merger. Other than the engagement of Imperial Capital by Parent in connection with the Merger, no material relationship existed during the past two years, nor is any material relationship mutually understood to be contemplated, between Imperial Capital and either Parent or the Company.

Imperial Capital’s primary role on behalf of Parent was to facilitate discussions between Parent and the Special Committee and to relay information and messaging to and from the Special Committee’s financial advisors. Imperial Capital also assisted Parent in formulating and refining negotiation strategies throughout the process. Finally, Imperial Capital assisted Parent in understanding the likely views that Houlihan Lokey (as financial advisor to the Special Committee) was formulating during the process. Imperial Capital was not asked to provide, nor did it provide, a fairness opinion to Parent or any of its affiliates with respect to the Merger Consideration. Aside from the two analyses described below, all opinions, reports and appraisals materially related to the potential transaction presented to, and relied on by, Parent were prepared and presented by management of Parent.

Imperial Capital provided two analyses (collectively, the “Preliminary Imperial Capital Views”) to Parent during the months of September 2021 and January 2022. Neither of the Preliminary Imperial Capital Views, alone or together, constitute an opinion of Imperial Capital as to the fairness to the Company’s stockholders of the Per Share Cash Consideration to be received by the Company’s stockholders in the Merger pursuant to the Merger Agreement. The Preliminary Imperial Capital Views provide preliminary thoughts on the possible valuations of the Company based on the proposals made by the Special Committee and its financial advisor in September 2021 and January 2022 as discussed below. The Preliminary Imperial Capital Views were confidential, were not intended for public disclosure, and were not subjected to any of the formal processes or approvals that Imperial Capital requires for any substantive valuation-oriented report that will be publicly disclosed. Further, the Preliminary Imperial Capital Views (i) were never finalized; (ii) were based on financial, economic, monetary market, and other conditions and circumstances as in effect on the date of such

materials (including the fact that IWCO had not been divested as of the time of both of the Preliminary Imperial Capital Views); and (iii) were intended for illustrative and comparative purposes only. Neither of the Preliminary Imperial Capital Views arrived at any findings or recommendations, and Parent did not impose any limitation on Imperial Capital’s scope of analysis.

The content of the Preliminary Imperial Capital Views is summarized as follows:

•        In September 2021, Imperial Capital prepared an analysis entitled “Imperial Capital’s View of Potential Houlihan Lokey and Special Committee Valuation.” The materials included, among other things: (i) the implied share price range of the Company based on assumed equity values for IWCO, ModusLink, and the remainder of the Company; (ii) the Company’s share price sensitivity based on various growth rates and discount rates for IWCO and ModusLink; (iii) IWCO’s enterprise value sensitivity based on various growth rates and discount rates; (iv) ModusLink’s enterprise value sensitivity base on various growth rates and discount rates; (v) a discounted cash flow analysis of IWCO and ModusLink; and (vi) a weighted average cost of capital analysis for IWCO and ModusLink. The full text of the September 2021 Preliminary Imperial Capital Views is filed as an exhibit to the Schedule 13E-3 filed by the Company.

•        In January 2022, Imperial Capital prepared a second analysis that was also entitled “Imperial Capital’s View of Potential Houlihan Lokey and Special Committee Valuation.” The materials included, among other things: (i) an updated implied share price range of the Company based on assumed equity values for IWCO, ModusLink, and the remainder of the Company; (ii) the implied share price range of the Company based upon the Company’s management projections; and (iii) an illustrative sensitivity analysis of the implied share price range of the Company based upon various total enterprise values for ModusLink as well as the Company’s management projections.

On January 6, 2021, January 24, 2021, March 9, 2021, March 12, 2021, March 22, 2021, and March 31, 2021, the Special Committee held meetings with representatives of Dentons and Houlihan Lokey in attendance, to discuss the progress in evaluating the Initial Proposal, the Company’s long-term outlook and projections prepared by ModusLink management and IWCO management for the Company’s ModusLink and IWCO business segments, respectively. During these meetings, the Special Committee discussed the challenges facing the Company’s two business segments and the potential for continued declines in outlook. During these meetings, the Special Committee discussed the potential benefits of reaching out to potential alternative buyers. The Special Committee noted that it would be highly unlikely that any third parties would have interest in a potential acquisition of the Company because of Parent’s controlling position in the Company and its stated unwillingness to sell its shares of Common Stock to any third party, as well as the composition and outlook of the Company. The Special Committee also noted that prior attempts to sell ModusLink and to recapitalize the entire Company had been unsuccessful, despite outreach to a broad universe of parties.

During the March 9, 2021 meeting of the Special Committee, representatives of Houlihan Lokey reviewed preliminary financial perspectives of ModusLink. Houlihan Lokey’s preliminary financial perspectives did not address IWCO, as updated IWCO management projections had not been provided to representatives of Houlihan Lokey. During this meeting, and other Special Committee meetings, the Special Committee and representatives from Houlihan Lokey discussed the trading price of the Common Stock, which was significantly in excess of the Initial Proposal.

During the March 12, 2021 meeting of the Special Committee, the Special Committee and Houlihan Lokey discussed the liquidity and trading price of the Company’s stock, including market reaction to the Company’s announcement of its second quarter results, noting that the stock closed at $1.74 per share on March 12, 2021 and had closed at or above $1.68 per share since January 19, 2021. The Special Committee determined that the Initial Proposal was not at a price per share level sufficient to warrant a counterproposal or price guidance in light of the current information provided to representatives of Houlihan Lokey, the preliminary financial perspectives of Houlihan Lokey, and the historical and current stock price and recent trading activity as compared to the value of the Initial Proposal. The Special Committee instructed representatives of Houlihan Lokey to reach out to Imperial Capital to deliver this message in order to elicit a potential reaction from Parent. In March of 2021, representatives of Houlihan Lokey met with representatives of Imperial Capital and discussed the Special Committee’s view of the Initial Proposal.

During the March 31, 2021 meeting of the Special Committee, representatives of Houlihan Lokey reviewed the Company’s recent stock price trading range and performance. The Special Committee and representatives of Houlihan Lokey also discussed financial performance and projections for ModusLink and IWCO. During this meeting, Houlihan Lokey reported to the Special Committee that it had not received any indication from Imperial Capital that Parent would be willing to modify the Initial Proposal. The Special Committee discussed whether it would

be in the best interests of the Company’s minority stockholders for the Special Committee to make a counterproposal to Parent. Based on the fact that the Special Committee was still waiting to receive additional and updated information from management of IWCO and the Company, and the absence of an enhanced proposal from Parent, the Special Committee determined that it would continue to negotiate with Parent, but would not make a counterproposal until Parent increased the value to the Company’s unaffiliated stockholders provided for in Parent’s Initial Proposal.

Between April 2021 and June 2021, the Company continued to face a number of challenges in its business operations, while its stock price continued to trade significantly above the proposed value in the Initial Proposal. Parent declined to increase its proposal during this time.

On June 7, 2021, the Special Committee held a meeting with representatives of Dentons and Houlihan Lokey in attendance, to discuss updates received by the Board regarding the performance of IWCO and its continued customer attrition. The Special Committee also discussed the adoption by the Board of a Competitive Improvement Plan for IWCO to upgrade its production platform to new digital and inserting technology, as well as expanding its market services capabilities, while reducing its costs. The Special Committee directed representatives of Houlihan Lokey to review updated financial information provided by IWCO management and to seek from IWCO management additional information regarding IWCO needed by Houlihan Lokey to complete its preliminary financial analysis. The Special Committee then directed representatives of Houlihan Lokey to reengage with Imperial Capital and Parent to seek an enhanced proposal from Parent.

On July 23, 2021, the Special Committee held a meeting with representatives of Dentons and Houlihan Lokey in attendance, to discuss updates on Houlihan Lokey’s requests for additional financial information regarding IWCO. Representatives of Houlihan Lokey reported to the Special Committee that it was expecting to receive additional information from the Company and IWCO management and would be in a position to report to the Special Committee on its preliminary financial analysis in several weeks.

On September 9, 2021, the Special Committee held a meeting with representatives of Dentons and Houlihan Lokey in attendance. At this meeting, representatives of Houlihan Lokey reviewed its preliminary financial analysis of the Company. Following further discussion, the Special Committee instructed the representatives of Houlihan Lokey to inform Imperial Capital and Parent that the Special Committee was not willing to recommend that the Company proceed with a transaction at the price set forth in the Initial Proposal and that, based on Houlihan Lokey’s preliminary financial analyses and the sustained increase in the trading price of its stock since January 2021, the Special Committee would be prepared to recommend a transaction based on cash consideration of $2.50 per share, and to invite Parent to submit a revised proposal should it wish to proceed with a transaction. Representatives of Houlihan Lokey communicated this message to representatives of Imperial Capital.

On October 6, 2021, the Special Committee held a meeting with representatives of Dentons and Houlihan Lokey in attendance. At this meeting, representatives of Houlihan Lokey reported that Imperial Capital had indicated that Parent might be in a position to propose a counterproposal of $2.15 per share. Houlihan Lokey also discussed that ModusLink and IWCO management would be providing revised financial projections and the Special Committee determined to re-convene once Houlihan Lokey had reviewed such revised financial projections and assessed the impact of the financial projections on its preliminary financial analysis.

On October 21, 2021, the Special Committee held a meeting with representatives of Dentons and Houlihan Lokey in attendance. At this meeting, representatives of Houlihan Lokey again summarized the results of a call held between representatives of Houlihan Lokey and Imperial Capital on October 5, 2021 to discuss the Special Committee’s $2.50 per share all-cash counterproposal and noted that Imperial Capital had indicated that Parent might be in a position to propose a counterproposal of $2.15 per share. Representatives of Houlihan Lokey then reviewed its updated preliminary financial analysis of the Company, noting declines in near-term financial projections for ModusLink and upward revisions to longer-term financial projections for IWCO based on figures provided by ModusLink and IWCO management, respectively. The Special Committee also discussed the recent performance of the stock, which had recently traded at an intraday high of $2.45. The Special Committee discussed whether the potential value of the net operating losses (“NOLs”) to Parent could also be a catalyst for a higher price. The Special Committee directed Houlihan Lokey to propose again a price of $2.50 per share and representatives of Houlihan Lokey communicated this message to representatives of Imperial Capital. The Special Committee discussed the desire to include substantial value for the NOLs in any transaction price, but was cognizant that the benefit from the NOLs was of limited utility to the Company due to its limited taxable income and also that it could not be transferred to another party (except for Parent), including through any acquisition of the Company.

Between October 21, 2021 and January 13, 2022, at the direction of the Special Committee, representatives of Houlihan Lokey and representatives of Imperial Capital had several conversations regarding the Special Committee’s view of the value of the Company. These discussions included the potential value of the NOLs, which Parent believed to be limited given the expiration dates of the Company’s NOLs.

Additionally, in October 2021, Company X contacted the Company to restart discussions regarding a potential transaction involving ModusLink. On November 25, 2021, Company X submitted an indication of interest to the Company, seeking to acquire 100% of ModusLink for a purchase price of $70 million (it was unclear, however, whether the approximately $20 million of ModusLink cash and cash equivalents would be treated as excess cash, which would potentially represent an overall implied equity value of $90 million). The Company’s management promptly updated the Board, including the Special Committee, of the indication of interest, while the Company discussed the indication of interest directly with Company X.

On January 10, 2022, the Special Committee held a meeting with representatives of Dentons and Houlihan Lokey in attendance. Representatives of Houlihan Lokey reviewed its updated preliminary financial analysis of the Company. The Special Committee continued to discuss the challenges faced by ModusLink and IWCO and the execution risk faced by the Company as a standalone platform absent a transaction with Parent.

On January 13, 2022, the Special Committee met, along with representatives of Dentons and Houlihan Lokey. Representatives of Houlihan Lokey reviewed their recent conversations with Imperial Capital. Representatives of Houlihan Lokey reported to the Special Committee that Imperial Capital had indicated that Imperial Capital’s previous suggestion that a price of $2.15 per share might be proposed by Parent was not confirmed by Parent and that Imperial Capital now believed that the highest end of any proposed price by Parent was closer to $1.80 per share in light of the Company’s recent stock performance, among other factors. The Special Committee directed Houlihan Lokey to propose that Parent make a proposal of $2.15 per share (as had previously been suggested by Imperial Capital) and representatives of Houlihan Lokey communicated this message to representatives of Imperial Capital. The Special Committee also discussed the efforts of the Company to sell ModusLink and Company X’s proposal to purchase ModusLink for $70 million.

The Special Committee subsequently discussed with its advisors the possibility that the Company would need to transfer IWCO to its lead creditors to avoid foreclosure. Discussions with Parent regarding the proposed transaction were suspended during this time as the Company prioritized evaluating its options with respect to IWCO, on the understanding that any potential disposition of IWCO to its lead creditors would impact the value of the Company and the structure and terms of any potential transaction between the Company and Parent or a third party buyer.

On February 16, 2022, the Special Committee met, along with representatives of Dentons and Houlihan Lokey, to discuss the potential decision of the Company to transfer IWCO to its creditors to avoid a foreclosure and eliminate debt and a potential sale of ModusLink to a third party.

On February 21, 2022, the Special Committee met, along with representatives of Dentons and Houlihan Lokey. Representatives of Houlihan Lokey reviewed the current status of discussions between Houlihan Lokey and Imperial Capital. The Special Committee and its advisors discussed the recent decision of the Company to transfer IWCO to its creditors to avoid a foreclosure and eliminate debt. The Special Committee also discussed the ongoing efforts of the Company to sell ModusLink including ongoing discussions with Company X and outreach to other parties. Representatives of Dentons advised the Special Committee that this process should now be included in the Special Committee’s mandate once IWCO was no longer a division of the Company. The Special Committee directed representatives of Dentons to speak to White & Case LLP (“White & Case”), counsel to the Company, to discuss delegating the ModusLink Sale Process to the Special Committee.

On February 25, 2022, the Company entered into a transaction agreement with IWCO and its creditors and their affiliates, pursuant to which the Company transferred all of its interests in IWCO to an entity owned by the creditors as part of a negotiated restructuring of the capital structure and certain financial obligations of IWCO to the creditors under a financing agreement with IWCO (the “Financing Agreement”). The Company received no cash consideration for the disposition. In addition, the parties also entered into mutual releases and the purchaser entity issued a note with a principal amount of $6,945,325.46 payable to the Company as consideration for intercompany obligations owed by IWCO to the Company (the “Subordinated Note”). The disposition of IWCO is discussed in further detail in the section entitled “Important Additional Information Regarding Steel Connect — Company Background — Disposition of IWCO” on page 112.

On March 4, 2022, Company X provided an indication of interest, proposing a purchase price for ModusLink of $80 million (inclusive of cash on the balance sheet).

On March 14, 2022, the Board met to discuss the latest indication of interest for ModusLink. The Board determined that it would be appropriate for the Special Committee to take the lead on any further discussions with Company X. Company management requested that White & Case contact Dentons to update them as counsel to the Special Committee and discuss the appropriate role for the Special Committee with respect to this indication of interest.

On March 22, 2022, the Special Committee met, along with representatives of Dentons and Houlihan Lokey, to discuss current developments. The Special Committee reported that the Company had made a counterproposal of $90 million to Company X for the purchase of ModusLink, but that Company X ultimately withdrew its updated indication of interest. Discussions were terminated with Company X before this process could be transferred to the Special Committee and the Special Committee reported that other outreach efforts by the Company had not resulted in any interest on the part of any parties contacted. The Special Committee also reported that they had discussions with representatives of Parent about reengaging on the potential transaction with Parent. Company X was later contacted by Houlihan Lokey during the go-shop period and indicated that it was not interested in pursuing a transaction with the Company.

On March 24, 2022, the Special Committee met, along with representatives of Dentons, to discuss a new proposal from Warren G. Lichtenstein on behalf of Parent to the Special Committee setting forth a new proposal based on all-cash consideration of $1.30 per share (the “Second Proposal”), representing a premium of approximately 10% over the closing price per share of common stock of the Company on March 23, 2022, and an approximately 83% increase to the closing share price on November 19, 2020, the closing price on the day of the Initial Proposal. The Special Committee discussed the fact that the revised proposal was for all cash, and that none of the conditions of the Initial Proposal relating to the Special Committee’s process or the approval of a majority of the minority stockholders of the Company had been varied. The Special Committee directed representatives of Dentons to discuss the Second Proposal with Houlihan Lokey, to request that Houlihan Lokey contact Company management to obtain updated projections from the Company and ModusLink and to request Houlihan Lokey’s estimate on when it would be in the position to review its updated preliminary financial analysis of the Company (based on the disposition of IWCO), views on the Second Proposal, as well as potential subsequent approaches and strategies for negotiating with Parent and Imperial Capital. Houlihan Lokey also requested additional information regarding the impact of the IWCO transfer on the Company’s likely NOL utilization in 2022 and beyond.

On March 28, 2022, Parent filed the letter setting forth the Second Proposal with the SEC in an amendment to its beneficial ownership report on Schedule 13D.

On April 4, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey. Representatives from Houlihan Lokey reviewed its updated preliminary financial analysis of the Company following the IWCO disposition, as well as a situation overview. The Special Committee discussed recent financial performance of ModusLink (as well as revisions to the fiscal year 2022 forecast by ModusLink management), the Company’s NOLs, and revisions to the Company’s corporate overhead costs (reflecting the potential for savings following the disposition of IWCO), which remained subject to further review by Company management. The Special Committee discussed the Company’s unsuccessful attempt to sell ModusLink, the continued operating challenges at ModusLink and strategies for responding to the $1.30 per share proposal. Based on these discussions, the Special Committee directed representatives of Houlihan Lokey to propose (A) a price of $1.70 per share in cash or (B) $1.45 per share in cash plus (i) a contingent value right that would pay stockholders their pro rata share of any net proceeds upon a sale of ModusLink above $80 million (the “ModusLink CVR”) and (ii) a contingent value right tied to Parent’s ability to utilize the NOLs (the “Tax CVR”). Representatives of Houlihan Lokey communicated this message to representatives of Imperial Capital.

On April 6, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey. The Special Committee continued its discussions from the April 4, 2022 meeting where it had directed representatives of Houlihan Lokey, in response to the $1.30 per share proposal received from Parent, to propose either $1.70 per share in cash or $1.45 per share in cash plus the ModusLink CVR and the Tax CVR. During these discussions, representatives of Houlihan Lokey reported that they had communicated the Special Committee’s response to representatives of Imperial, as directed, subsequent to which Imperial indicated that Steel Partners was unlikely to increase the cash consideration relative to the level proposed or agree to the Tax CVR. Also during these discussions, the Special Committee considered the complexity of structuring a Tax CVR, and discussed the challenges associated with the realization of value by the minority stockholders, especially given the residual life of a material portion of the Company’s NOLs. Representatives of

Houlihan Lokey briefly discussed the updated financial information it was seeking from management of the Company following the disposition of IWCO, including the potential impact the disposition would have on management’s financial projections, including corporate expenses and projected NOL usage.

Between April 12, 2022 and April 14, 2022, representatives of Parent and the Special Committee met on several occasions, with representatives of Dentons and Houlihan Lokey, legal and financial advisors to the Special Committee, and Greenberg Traurig, LLP (“Greenberg Traurig”) and Imperial Capital, legal and financial advisors to Parent, present to discuss the Second Proposal. During these discussions, Parent indicated that it would be willing to propose $1.32 per share along with the ModusLink CVR. Parent also proposed to agree to a go-shop provision. The Special Committee subsequently proposed a price of $1.40 per share and the ModusLink CVR. On April 13, 2022, Parent proposed a price of $1.35 per share and the ModusLink CVR, with a proposal to proceed without a majority of the minority condition. Parent also agreed to add additional value to the go-shop provision by agreeing to enter into a voting agreement to approve any transaction offered during the go-shop period that is more favorable to the stockholders. The Special Committee indicated that it would not agree to eliminate the majority of the minority condition based on the proposal suggested by Parent.

On April 15, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey, to discuss the current proposal from Parent to proceed without a majority of the minority condition at a price of $1.35 per share and a ModusLink CVR. The Special Committee discussed the legal and practical ramifications of proceeding without a majority of the minority condition. The Special Committee concluded that the majority of the minority condition was important to the Company’s unaffiliated stockholders and that, absent a compelling value proposition, the Special Committee would not recommend a transaction without this condition. The Special Committee directed representatives of Dentons to convey this message to Greenberg Traurig and Dentons conveyed this message that same day.

On April 20, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey, to discuss the latest status of discussions with Parent and a proposal that had been made by a global leader in financial services to engage in a complicated structured transaction with the Company to extract value for the Company’s NOLs. The Special Committee directed Houlihan Lokey to speak to Parent about this proposal. The Special Committee and its representatives acknowledged that the proposal was of a very preliminary form and would require significant time and effort before it could be considered as a viable alternative to a transaction with Parent.

On April 25, 2022, representatives of Greenberg Traurig sent a draft of the Merger Agreement to representatives of Dentons.

On April 27, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey, to further discuss a structured proposal that had been preliminarily reviewed with Houlihan Lokey by the previously noted global leader in financial services that envisioned a multi-step process to take advantage of certain exceptions to Internal Revenue Code Section 382 change of control NOL limitations under the bankruptcy code. Such a transaction would by necessity treat Parent differently from the minority shareholders and require its consent in order to pursue such a proposal. The Special Committee directed Houlihan Lokey to speak to Imperial Capital regarding this proposal. Representatives of Dentons conveyed that they had received a draft of the Merger Agreement from representatives of Greenberg Traurig.

On April 28, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey, to discuss the structured proposal. Representatives from Houlihan Lokey reported that they had discussed the structured proposal with representatives of Imperial Capital, and that Parent was not in favor of pursuing this proposal due to complexity, execution challenges and significant time required to complete such a transaction (which may exceed the residual life of the $1.8 billion of NOLs expiring in 2023), among other factors. At this meeting the Special Committee continued to discuss the importance of a majority of the minority condition and that they would not be willing to forego this provision absent a significant change to Parent’s proposal.

On May 10, 2022 Parent communicated to the Special Committee an alternative structure based on a $1.30 cash price, the ModusLink CVR and the Tax CVR. However, the Tax CVR would be subject to a $0.15 per share cap and would be contingent on specific usage parameters laid out in the proposal. In addition, the proposal continued to forego the majority of the minority vote condition.

On May 13, 2022, the Special Committee met along with representatives from Dentons and Houlihan Lokey. The Special Committee and its advisors discussed the alternative structure proposed by Parent and the potential added monetary value; however, given both the uncertainties regarding NOL usage and the complexity and limitations of the proposed Tax CVR, the Special Committee maintained that this structure neither provided the same certainty of value as Parent’s alternative structure (based on $1.35 of cash and a ModusLink CVR) nor did it provide sufficient value to justify elimination of the majority of the minority vote condition. In assessing the potential value of the NOLs to Parent, the Special Committee and its representatives considered the near-term expiration of approximately $1.8 billion of NOLs in 2023 and its understanding that Parent had its own tax attributes to utilize in the same period, which, the Special Committee determined, created additional uncertainty regarding any future utilization by Parent and the minority shareholders’ ability to extract value from a Tax CVR. The Special Committee also noted that a transaction structure with a third party tied to the ultimate usage of the NOLs was not a legitimate strategic alternative available to the Company as Parent is the only potential buyer that can utilize the NOLs after an acquisition without triggering limitations under Section 382 of the Internal Revenue Code. The Special Committee noted that it would be willing to consider a transaction structure based on a $1.30 cash price, the ModusLink CVR tied to the sale of ModusLink, and the Tax CVR; however, the Tax CVR would need to be more comprehensive than the type currently proposed by Parent, and Parent had demonstrated a lack of willingness to negotiate the Tax CVR any further.

On May 18, 2022, the Special Committee met along with representatives from Dentons and Houlihan Lokey. The Special Committee discussed proposed strategies for improving the most recent proposal from Parent and directed representatives of Houlihan Lokey to propose that Parent enhance its most recent proposal.

On May 27, 2022, representatives from Greenberg Traurig and representatives from Dentons engaged in a conversation during which Greenberg Traurig indicated that Parent would be willing to agree to $1.35 per share with the ModusLink CVR, go-shop, Parent voting commitment to approve a higher proposal and to maintain the majority of the minority condition (the “Final Proposal”) as its best and final proposal (in line with a similar communication by representatives of Imperial Capital to representatives of Houlihan Lokey around that time). Later that day, representatives from Greenberg Traurig sent a revised Merger Agreement to representatives of Dentons, which representatives of Dentons shared with the Special Committee and Houlihan Lokey.

On May 30, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey. The Special Committee, representatives from Dentons and Houlihan Lokey discussed the proposal of $1.35 per share with a ModusLink CVR, go-shop, Parent voting commitment to approve a higher proposal and agreement to maintain the majority of the minority condition. Following discussion, the Special Committee instructed the representatives of Houlihan Lokey to inform Parent that the Special Committee would be willing to pursue a transaction with Parent on the terms outlined above, and directed representatives of Dentons to request an updated Merger Agreement from Greenberg Traurig and to commence negotiation of the terms of a definitive Merger Agreement and related documentation including a voting agreement, and to prepare disclosure schedules with input from the Company’s management and its counsel, White & Case.

On June 1, 2022, Parent filed an amendment to its beneficial ownership form on Schedule 13D with the SEC disclosing that it had made the Final Proposal to the Special Committee on May 27, 2022.

On June 2, 2022, Dentons discussed the process for revising the Merger Agreement with White & Case and Dentons and White & Case agreed that Dentons would prepare and send to Greenberg Traurig a revised draft of the Merger Agreement and White & Case would begin to prepare disclosure schedules.

On June 3, 2022, representatives of Dentons delivered a revised draft of the Merger Agreement to representatives of Greenberg Traurig, and, over the next several days, the representatives of Dentons and Greenberg Traurig negotiated the terms of the Merger Agreement, the ModusLink CVR Agreement and the Support Agreement and while White & Case prepared disclosure schedules with input from the Company’s management.

On June 8, 2022, the Special Committee met, along with representatives from Dentons and Houlihan Lokey, to discuss the status of the definitive agreements. Representatives of Dentons described certain open issues relating to the termination fee. The Special Committee directed representatives from Dentons to continue to require a termination fee. The Special Committee and representatives of Houlihan Lokey also discussed the updates to the financial projections that the Special Committee and Houlihan Lokey were awaiting from ModusLink and Company management.

On June 10, 2022, representatives from Dentons and Greenberg Traurig negotiated certain provisions and proposals with respect to the Merger Agreement, which involved negotiations regarding the go-shop and non-solicitation sections, representations and warranties, fees and expenses and termination provisions of the Merger Agreement.

On June 10, 2022, the Special Committee and representatives from Dentons and Houlihan Lokey met with ModusLink management to discuss such management’s updated financial projections. Members of the Board not on the Special Committee were invited to join this call to be able to make their own independent analysis regarding the financial projections. ModusLink management explained the methodology and assumptions utilized by such management in preparing the financial projections.

On June 12, 2022, representatives from Dentons delivered a revised draft of the Merger Agreement, the ModusLink CVR Agreement and the Support Agreement to representatives of Greenberg Traurig and engaged in additional discussions to finalize these agreements.

Also on June 12, 2022, the Special Committee met with representatives from Dentons and Houlihan Lokey to further consider the proposed transaction. Glen Kassan, a Board member affiliated with Parent, attended a portion of the meeting for the sole purpose of educating himself on the material terms of the transaction summary prepared by Dentons and to understand the process by which projections were prepared and shared with representatives of Houlihan Lokey. The information that was discussed in Mr. Kassan’s presence reflected market data as of dates proximate to such materials and were based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and information made available to Houlihan Lokey as of, the date of such materials. The other independent members of the Board who have no affiliation with Parent were also invited by the Special Committee to attend the meeting.

At this meeting, Dentons reviewed with the members of the Special Committee their fiduciary duties in the context of a potential “going-private” transaction with a controlling stockholder. Dentons then summarized the principal terms and conditions of the Merger Agreement and the ModusLink CVR Agreement, as well as certain related transaction agreements. After this presentation on principal terms, Mr. Kassan left the meeting at the request of the Special Committee. At the request of the Special Committee, Houlihan Lokey then reviewed and discussed its financial analyses of the Per Share Merger Consideration. Thereafter, at the request of the Special Committee, Houlihan Lokey orally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Special Committee dated June 12, 2022), to the effect that, as of such date and based on and subject to various procedures followed, assumptions made, qualifications and limitations on the review undertaken and the other matters considered by Houlihan Lokey in connection with the preparation of its opinion, the Per Share Merger Consideration to be received by the holders of Common Stock (other than holders of Excluded Shares and Dissenting Shares) in the Merger pursuant to the Merger Agreement was fair to such holders from a financial point of view. Following discussion, the Special Committee unanimously (1) determined that the terms of the Merger Agreement are fair to and in the best interests of the Company and the unaffiliated stockholders, (2) recommended to the Board that the Board adopt resolutions approving and declaring advisable the Merger Agreement and the Transactions and (3) recommended to the Board that the Board recommend that the holders of capital stock of the Company entitled to vote, vote for the adoption of the Merger Agreement.

In the evening of June 12, 2022, the Board held a meeting to consider the approval of the adoption of the Merger Agreement and the Merger. The Special Committee delivered its recommendation to the Board and, following the Special Committee recommendation and its own deliberations, the Board, among other things (1) determined that the terms of the Merger Agreement and the Transactions are fair to and in the best interests of the Company and the unaffiliated stockholders, (2) approved and declared advisable the Merger Agreement and the Transactions and (3) recommended that the holders of capital stock of the Company entitled to vote, vote for the adoption of the Merger Agreement. For the basis of the Board’s determination in this regard, please see “— Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger — Recommendation of the Board” beginning on page 27.

Later that day on June 12, 2022, the Merger Agreement was executed by the Company and the Parent Parties, and the Support Agreement was executed by the Company, Parent and certain stockholders who are affiliates of Parent.

On June 13, 2022, prior to the opening of trading on the U.S. public stock markets, the Company issued a press release announcing the execution of the Merger Agreement. The press release announcing the execution of the Merger Agreement also included a brief description of the “go-shop” period that expires at 11:59 p.m., Eastern Time, on July 12, 2022, during which the Company may actively solicit and consider alternative acquisition proposals and enter into an acquisition agreement with respect to an alternative proposal received during such period without having to pay a termination fee to Parent.

During the “go-shop” period, Houlihan Lokey contacted and/or held discussions with 33 third-parties to gauge their interest in pursuing a potential transaction with the Company. Of the 33 parties contacted by Houlihan Lokey, 27 formally passed and five parties did not respond to the outreach. One party that had previously expressed interest in ModusLink in 2019 as a part of the sale process for ModusLink did not formally pass, but indicated that they were unlikely to submit a proposal before the expiration of the go-shop period, and there has been no communication between the Special Committee (or Houlihan Lokey) and that party’s representatives since the go-shop period expired at 11:59 p.m., Eastern Time, on July 12, 2022.

Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger

As described in the section entitled “— Background of the Merger”, above, the Board duly established the Special Committee and delegated to it the power and authority, among other things, to (1) consider whether or not it is in the best interests of the Company and the unaffiliated stockholders to engage in discussions and/or negotiations relating to a potential transaction with Parent, (2) engage in such discussions and/or negotiations relating to all terms and conditions of a potential transaction with Parent (financial or otherwise), (3) consider and review potential alternatives to a transaction with Parent, (4) consult with and/or advise management of the Company in connection with discussions and/or negotiations concerning potential terms and conditions of a potential transaction with Parent, (5) interview, select and retain, at the Company’s expense, such financial advisors, legal counsel and other advisors as the Special Committee deems appropriate, including an investment bank to deliver a fairness opinion, if requested by the Special Committee, in connection with a potential transaction with Parent, (6) establish the terms of engagement of each such advisor and (7) make any recommendations to the Board concerning a potential transaction with Parent that the Special Committee deems appropriate. The Board further resolved that it would not approve or recommend to the stockholders of the Company a transaction with Parent or any alternative transactions without the prior favorable recommendation of the Special Committee.

The Special Committee, acting with the advice and assistance of its independent legal and financial advisors, evaluated and negotiated the Merger Agreement and the Transactions, including the Merger, and after careful consideration, at a meeting of the Special Committee held on June 12, 2022, the Special Committee, among other things, unanimously adopted resolutions:

•        determining that the terms of the Merger Agreement and the Transactions are fair to and in the best interests of the Company and the unaffiliated stockholders;

•        recommending to the Board that the Board adopt resolutions approving and declaring advisable the Merger Agreement and the Transactions; and

•        recommending to the Board that the Board recommend to the holders of the capital stock of the Company entitled to vote, that they vote for the adoption of the Merger Agreement.

On June 12, 2022, after careful consideration, based in part on the unanimous recommendation of the Special Committee, the Board, adopted resolutions:

•        determining that the Merger Agreement and the Transactions are fair to and in the best interests of the Company and the unaffiliated stockholders;

•        approving and declaring advisable the Merger Agreement and the Transactions;

•        directing that the Merger Agreement be submitted to the holders of capital stock of the Company for its adoption at a special meeting established for such purpose; and

•        recommending that the holders of capital stock of the Company entitled to vote, vote for the adoption of the Merger Agreement.

Accordingly, the Board recommends that you vote “FOR” the Merger Proposal to adopt the Merger Agreement at the Annual Meeting.

In considering the recommendations of the Board with respect to the Merger Proposal, you should be aware that executive officers and directors have certain interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Special Committee, consisting entirely of independent directors, and the Board were aware of these interests and considered them, among other matters, in evaluating the Merger Agreement and the Transactions and in making its decision to recommend that the Board approve and declare advisable the Merger Agreement and the Transactions. For more information about these interests, refer to the section entitled “— Interests of the Company’s Directors and Executive Officers in the Merger” beginning on page 54. The Special Committee and the Board believe that the Merger Agreement and the Transactions are fair to and in the best interest of the Company and the unaffiliated stockholders.

The Special Committee engaged its own independent legal and financial advisors and received advice throughout the negotiations from such advisors. Since the members of the Special Committee are disinterested with respect to the Transactions and independent of, and not affiliated with the Parent Group and its affiliates or any affiliate of Parent, the Special Committee believed that it could effectively represent the interests of the Company’s unaffiliated stockholders in negotiating the terms of the Merger Agreement and the Transactions, including the Merger, and in making its decision to recommend that the Board approve and declare advisable the Merger Agreement and the Transactions.

In evaluating the Merger Agreement and the Transactions and making the decisions, determinations and recommendations described above, the Special Committee and the Board considered the following potentially positive factors, which are not presented in any relative order of importance:

•        certain factors related to the Company’s business, financial condition and results of operations, and the Company’s prospects and plans, including:

•        the reviews undertaken by, and understandings of, the Special Committee and the Board with respect to the Company’s business, operations, assets, financial condition, earnings, ownership structure, management, strategy, competitive position, current, historical and projected financial performance, prospects and plans, as well as the associated risks involved achieving such forecasts, prospects and plans;

•        the reviews undertaken by, and understandings of, the Special Committee and the Board with respect to economic and market conditions and trends, as well as the challenges and uncertainty surrounding such conditions and trends, both on a historical and prospective basis, in the near term and the long term, such as:

•        the nature of the industry in which the Company operates, including anticipated industry trends and changing competitive dynamics;

•        the potential for continuing supply chain disruptions, which have adversely impacted, and continue to adversely impact, certain aspects of the Company’s business;

•        ModusLink’s historical track record of declines in topline performance due to the challenges noted above, among others;

•        the potential risks to the Company arising from customer concentration and the limited scale of its platform more generally;

•        the potential risks to the Company of continuing to have publicly traded common stock, including the risks of market volatility;

•        certain compliance costs and obligations imposed on the Company as a result of having publicly traded common stock;

•        the risks and uncertainties relating to the Company’s concentrated stock ownership;

•        the management forecasts prepared by Company and ModusLink management for, or otherwise made available to, the Special Committee and the Board;

•        certain challenges and limitations on the Company of continuing as a stand-alone public company which (following the transfer of the IWCO business) has only a single operating business;

•        the near-term expiration of approximately $1.8 billion of NOLs in 2023 and the fact that it was unlikely that the Company would be able to utilize any material portion of its NOLs before their expiration in light of historical financial results and management’s financial projections for the Company’s business;

•        the fact that the limitations imposed by Section 382 of the Internal Revenue Code would render it impracticable for any third party (other than Parent) to utilize the NOLs after an acquisition; and

•        the limited indications of interest received from potential purchasers of ModusLink since the commencement of the ModusLink Sale Process;

•        the current and historical market prices of the Common Stock, including as set forth in the table under “Important Additional Information Regarding Steel Connect — Market Price of Our Common Stock,” taking into account the market performance of the Common Stock relative to the common stock of other participants in the industry in which the Company operates and general market indices;

•        the fact that the Per Share Merger Consideration includes $1.35 in cash, providing the Company’s unaffiliated stockholders with certainty of value and immediate liquidity at an attractive per share equity value without the market or execution risks associated with continued independence;

•        the fact that the Per Share Merger Consideration includes a CVR tied to a sale of ModusLink over the 24 months following the Closing Date, providing the Company’s stockholders (other than holders of Excluded Shares or Dissenting Shares) with potential additional value upon a sale for more than $80 million of net proceeds;

•        the beliefs of the Special Committee and the Board that the Merger represents the best transaction reasonably available for the Company’s unaffiliated stockholders in light of the foregoing factors, among other things;

•        the views of the Special Committee and the Board that the Per Share Merger Consideration to be paid to the holders of the Common Stock (other than holders of Excluded Shares or Dissenting Shares) in accordance with the Merger Agreement represented the highest per share consideration that reasonably could be obtained;

•        the beliefs of the Special Committee and the Board that the Per Share Merger Consideration to be paid to the holders of the Common Stock (other than holders of Excluded Shares and Dissenting Shares) was more favorable to such holders than the potential value that might result from other alternatives reasonably available to the Company, including the alternative of remaining an independent public company and pursuing the Company’s current strategic plan, and other strategic or financial alternatives that might be undertaken as an independent public company, in light of a number of factors, including the risks and uncertainties associated with those alternatives, and the administrative and compliance costs associated with operating the Company as a publicly traded company;

•        that the Special Committee and the Board, with the assistance of their respective independent legal and other advisors, had considered alternatives, including continuing to operate the Company on a standalone basis, other potential value creating options or a sale to an alternative buyer, and considered the risks and uncertainties associated with such alternatives, and each respectively formed the view that no other alternatives were reasonably likely to create greater value for the Company’s unaffiliated stockholders than the Merger, taking into account the alternatives reasonably available to the Company and the risk of execution, as well as business, competitive, industry and market risks;

•        the beliefs of the Special Committee and the Board that, after the extensive negotiations conducted by the Special Committee, with the assistance of experienced independent legal and financial advisors, the Company obtained the best terms and highest price that Parent is willing to pay for the Company, pursuant to a thorough process and that further negotiations would have created a risk of causing Parent to abandon the Merger altogether or materially delay the entry into definitive transaction agreements with respect to the Merger;

•        the reviews undertaken by the Special Committee and the Board of the Merger Agreement and the structure of the Transactions, including, among others, the specific financial and other terms and conditions set out below;

•        the terms of the Merger Agreement permitting the Company to solicit Takeover Proposals (as defined herein) during the Go-Shop Period;

•        the terms of the Merger Agreement permitting the Company to receive Takeover Proposals that do not result from a breach in any material respect of the Company’s non-solicitation obligations in the Merger Agreement, and the other terms and conditions of the Merger Agreement, including:

•        that the Company may, in certain circumstances, (1) furnish any information or access thereto in response to a request from a person making such Takeover Proposal and (2) participate or engage in negotiations or discussions with any such person regarding such Takeover Proposal; provided, in each case, that (a) the Takeover Proposal is received prior to obtaining the requisite Company stockholder approval and the majority of the minority stockholder approval with respect to the Merger Proposal and (b) the Board (acting on the recommendation of the Special Committee) or the Special Committee determines in good faith (after consultation with its legal and financial advisors) that such Takeover Proposal (as defined herein) either constitutes a Superior Proposal or reasonably could be expected to lead to, or result in, a Superior Proposal and failure to take such action could be inconsistent with the directors’ fiduciary duties under applicable law;

•        that the Merger Agreement may be terminated, in certain circumstances, including, among others, by the Board (acting on the recommendation of the Special Committee) or the Special Committee to enter into an Alternative Acquisition Agreement (as defined herein), which has been authorized and approved by the Board, with respect to a bona fide written Takeover Proposal that did not result from a breach in any material respect of the non-solicitation obligations in the Merger Agreement and that the Board (acting on the recommendation of the Special Committee) or the Special Committee determines in good faith, after consultation with its legal and financial advisors, constitutes a Superior Proposal; and

•        that the Board, acting on the recommendation of the Special Committee, or the Special Committee may, in certain circumstances, make a Change of Recommendation, including in response to (1) an Intervening Event (as defined in the Merger Agreement), or (2) a bona fide written Takeover Proposal that did not result from a breach in any material respect of the non-solicitation obligations in the Merger Agreement that is received by the Company after the date of the Merger Agreement and is not withdrawn prior to the Change of Recommendation, and that the Board, acting on the recommendation of the Special Committee, or the Special Committee determines in good faith, after consultation with its legal and financial advisors, constitutes a Superior Proposal, in each case, subject to and in accordance with the terms and conditions of the Merger Agreement;

•        the likelihood of the Merger being completed, based on, among other matters:

•        the Company’s ability, under circumstances specified in the Merger Agreement, to seek specific performance of Parent’s obligation to cause the Merger to occur;

•        the likelihood and anticipated timing of completing the Merger in light of the scope of the conditions to completion;

•        other terms and conditions of the Merger Agreement, including:

•        the terms of the Merger Agreement providing the Company sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Merger or the termination of the Merger Agreement;

•        the Company’s ability, under circumstances specified in the Merger Agreement, to seek specific performance to prevent certain breaches of the Merger Agreement by Parent Parties; and

•        the scope of the representations, warranties and covenants being made by the Company and the Parent Parties;

•        the financial analysis reviewed by Houlihan Lokey with the Special Committee as well as the oral opinion of Houlihan Lokey rendered to the Special Committee on June 12, 2022 (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Special Committee dated June 12, 2022), as to the fairness, from a financial point of view and as of such date, of the Per Share Merger Consideration to be received by the holders of Common Stock (other than holders of Excluded Shares and Dissenting Shares) in the Merger pursuant to the Merger Agreement, which opinion was based on and subject to the various procedures followed, assumptions made, qualifications and limitations on the review undertaken and the other matters considered by Houlihan Lokey in connection with the preparation of its opinion. See “The Merger — Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee”;

•        the beliefs of the Special Committee and the Board that they were fully informed about the extent to which the interests of Parent Group in the Merger differ from those of the unaffiliated stockholders;

•        the fact that the Parent Group Members, who collectively and beneficially held approximately 51.6% of the voting power of the Company’s outstanding capital stock as of June 12, 2022, have agreed to vote their shares of Common Stock and Series C Preferred Stock in favor of the adoption of the Merger Agreement;

•        the fact that Parent Group Members, who collectively and beneficially held approximately 51.6% of the voting power of the Company’s outstanding capital stock as of June 12, 2022, have agreed to vote their shares of Common Stock and Series C Preferred Stock in favor of the adoption of a Superior Proposal;

•        the fact that the Merger Agreement is subject to adoption by the affirmative vote of holders of: (i) a majority of the outstanding shares of Series C Preferred Stock; (ii) a majority in voting power of the outstanding shares of Common Stock and Series C Preferred Stock (voting on an as converted to shares of Common Stock basis), voting together as a single class; and (iii) a majority of the outstanding shares of Common Stock not owned, directly or indirectly, by the Parent Parties, any other officers or directors of the Company or any other person having any equity interest in, or any right to acquire any equity interest in, Merger Sub or any person of which Merger Sub is a direct or indirect subsidiary;

•        the right of the Company’s stockholders to exercise their statutory appraisal rights under Section 262 of the DGCL and receive payment of the fair value of their shares of Common Stock in lieu of the Merger Consideration to be paid per share of Common Stock, subject to and in accordance with the terms and conditions of the Merger Agreement and the DGCL, unless and until any such Company stockholder fails to perfect or effectively withdraws or loses his, her, its or their rights to appraisal and payment under the DGCL; and

•        the fact that since the public announcement of the Merger Agreement, none of the Company, Parent, the Special Committee, the Board, nor any of their respective independent legal and financial advisors, as applicable, have received any actionable inbound inquiries from third parties related to potential alternative acquisition proposals.

In evaluating the Merger Agreement and the Transactions, and making the decisions, determinations and recommendations described above, the Special Committee and the Board considered a number of procedural safeguards that they believed were and are present to ensure the fairness of the Merger Agreement and the Transactions, and to permit the Special Committee to represent effectively the interests of the Company’s unaffiliated stockholders. These procedural safeguards include the following, which are not presented in any relative order of importance:

•        that the Special Committee was formed immediately upon the Company’s receipt of an acquisition proposal from Parent and prior to any consideration of the Merger Agreement and the Transactions;

•        that the Special Committee consists entirely of directors who are independent of, and not affiliated with, the Parent Group, and who are not members of the Company’s management;

•        that the members of the Special Committee are disinterested with respect to the Transactions and had no financial interest in the Merger different from, or in addition to, the Company’s unaffiliated stockholders generally (other than as described in “— Interests of Steel Connect’s Directors and Executive Officers in the Merger” beginning on page 54);

•        that the members of the Special Committee were adequately compensated for their services and that their compensation was in no way contingent on their approving the Merger Agreement and taking the other actions described in this Proxy Statement in the section entitled “Interests of Steel Connect’s Directors and Executive Officers in the Merger — Compensation of the Special Committee” on page 56;

•        that the Special Committee had exclusive authority to decide whether or not to proceed with a transaction with Parent or any alternative thereto, subject to the Board’s approval of such transactions;

•        that the Special Committee retained and was advised by its own experienced and independent legal and financial advisors;

•        that the Special Committee had the power and authority, among other things, to (1) consider whether or not it was in the best interests of the Company and the unaffiliated stockholders to engage in discussions and/or negotiations relating to a potential transaction with Parent, (2) engage in such discussions and/or negotiations relating to all terms and conditions of a potential transaction with Parent (financial or otherwise), (3) consider and review potential alternatives to a transaction with Parent, (4) consult with and/or advise management in connection with discussions and/or negotiations concerning potential terms and conditions of a potential transaction with Parent, (5) interview, select and retain, at the Company’s expense, such financial advisors, legal counsel and other advisors as the Special Committee deems appropriate, including an investment bank to deliver a fairness opinion, if requested by the Special Committee, in connection with a potential transaction with Parent, (6) establish the terms of engagement of each such advisor and (7) make any recommendations to the Board concerning a potential transaction with Parent that the Special Committee deemed appropriate;

•        that the Board was not permitted to approve or recommend to the Company’s stockholders a transaction with Parent or any alternative transactions without the prior favorable recommendation of the Special Committee;

•        that the Special Committee had no obligation to recommend any transaction, including a transaction with Parent, and that the Special Committee had the authority to reject any proposals made by Parent or any other person;

•        that the Special Committee, together with its independent financial and legal advisors, conducted a process involving deliberations over a period of time, to consider:

•        potential alternatives to the proposed transaction with respect to the Company; and

•        the Merger Agreement and the Transactions;

•        the consummation of the Transactions is subject to the Company stockholder approval, which requires the affirmative vote of holders of (i) a majority of the outstanding shares of Series C Preferred Stock; (ii) a majority in voting power of the outstanding shares of Common Stock and Series C Preferred Stock (voting on an as converted to shares of Common Stock basis), voting together as a single class and (iii) a majority of the outstanding shares of Common Stock not owned, directly or indirectly, by the Parent Parties, any other officers or directors of the Company or any other person having any equity interest in, or any right to acquire any equity interest in, Merger Sub or any person of which Merger Sub is a direct or indirect subsidiary;

•        that the terms of the Merger Agreement, including the Per Share Merger Consideration, were the product of extensive negotiations between the Special Committee and its legal and financial advisors, on the one hand, and Parent, Merger Sub and their affiliates and legal and financial advisors, on the other hand, that resulted, among other things, in an increase in the Per Share Merger Consideration during the course of negotiations as compared to the Initial Proposal, and the improvement, from the perspective of the Company, of other terms of the Merger and the Merger Agreement;

•        the various terms of the Merger Agreement that are intended to help ensure that the Company’s unaffiliated stockholders receive the highest price per share reasonably available, including:

•        that the Merger Agreement may be terminated, in certain circumstances, including, among others, by the Board (acting on the recommendation of the Special Committee) or the Special Committee to enter into an Alternative Acquisition Agreement (which has been authorized and approved by the Board) with respect to a bona fide written Takeover Proposal that did not result from a breach

in any material respect of the non-solicitation obligations in the Merger Agreement and that the Board (acting on the recommendation of the Special Committee) or the Special Committee determines in good faith, after consultation with its legal and financial advisors, constitutes a Superior Proposal (as more fully described under “Proposal No. 1: The Merger Proposal — The Merger Agreement” beginning on page 79);

•        that the Board, acting on the recommendation of the Special Committee, or the Special Committee may, in certain circumstances, make a Change of Recommendation, including in response to (1) an Intervening Event, or (2) a bona fide written Takeover Proposal that did not result from a breach in any material respect of the non-solicitation obligations in the Merger Agreement received by the Company after the date of the Merger Agreement and is not withdrawn prior to the Change of Recommendation, and that the Board, acting on the recommendation of the Special Committee, or the Special Committee determines in good faith, after consultation with its legal and financial advisors, constitutes a Superior Proposal; in each case, subject to and in accordance with the terms and conditions of the Merger Agreement;

•        that the Special Committee made its evaluation of the Merger Agreement and the Transactions, including the Merger, based upon the factors discussed in this proxy statement and with the full knowledge of the interests of Parent Group in the Merger; and

•        the ability of the Company and its representatives to actively solicit alternate buyers during the Go-Shop Period.

In evaluating the Merger Agreement and the Transactions and making the decisions, determinations and recommendations described above, the Special Committee and the Board also considered the following potentially negative factors, which are not presented in any relative order of importance:

•        that, following the completion of the Merger, the Company will no longer exist as an independent public company and that the consummation of the Merger and receipt of the Per Share Merger Consideration, while providing relative certainty of value, will not allow the Company’s unaffiliated stockholders to participate in potential further growth in the Company’s assets, future earnings growth, future appreciation in value of the Common Stock or any future dividends after the Merger (except as specifically provided for in the ModusLink CVR Agreement);

•        the risk that the Transactions, including the Merger, may not be consummated in a timely manner or at all, for a variety of reasons, and the consequences thereof, including (1) the potential loss of value to the Company’s stockholders, including the reduction of the trading price of the shares of Common Stock, (2) the potential negative impact on the operations and prospects of the Company, including the risk of loss of key personnel and certain key members of senior management, and (3) the market’s perception of the Company’s prospects could be adversely affected if the Transactions were delayed or were not consummated;

•        the possible effects of the pendency or consummation of the Transactions, including the potential for suits, actions or proceedings in respect of the Merger Agreement or the Transactions, the risk of any loss or change in the relationship of the Company and its subsidiaries with their respective employees, agents, customers and other business relationships, and any possible effect on the Company’s ability to attract and retain key employees, including that certain key members of senior management might choose not to remain employed with the Company prior to the completion of the Merger;

•        the risk of incurring substantial expenses related to the Merger, including in connection with any litigation that may arise in the future;

•        the risks and potentially negative factors described in “— Certain Effects of the Merger” beginning on page 48;

•        that the Company’s directors, officers and employees have expended and will expend extensive efforts attempting to complete the Transactions and such persons have experienced and will experience significant distractions from their work during the pendency of the Transactions and that the Company has incurred and will incur substantial costs in connection with the Transactions, even if the Transactions are not consummated;

•        that the receipt of the Per Share Cash Merger Consideration in exchange for shares of Common Stock pursuant to the terms of the Merger Agreement will be a taxable transaction for U.S. federal income tax purposes as described in the section entitled “— Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 56;

•        the restrictions imposed by the Merger Agreement on the Company’s solicitation of Takeover Proposals from third parties, and that prospective bidders may perceive Parent’s right under the Merger Agreement to negotiate with the Company prior to the Company being able to terminate the Merger Agreement and accept a Superior Proposal to be a deterrent to making alternative proposals;

•        that the Parent Group’s existing ownership interest in the Company would likely be taken into account by third parties considering whether to make Takeover Proposals;

•        that, if the Merger Agreement is terminated in connection with the Company’s entry into an Alternative Acquisition Agreement with respect to a Superior Proposal, the Company is obligated to pay a termination fee and reimburse Parent for certain of its expenses;

•        the understanding that the Company’s executive officers and directors have certain interests in the Merger that may be different from, or in addition to, the interests of the Company’s stockholders generally (as discussed under “— Interests of Steel Connect’s Directors and Executive Officers in the Merger” beginning on page 54); and

•        the restrictions placed on the conduct of the Company’s business prior to the completion of the Merger pursuant to the terms of the Merger Agreement, which could delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company absent the pending completion of the Merger.

The Special Committee and the Board concluded that, overall, the potentially positive factors outweighed the uncertainties, risks and potentially negative factors relevant to the Merger Agreement and the Transactions, including the Merger. Accordingly, the Special Committee and the Board determined that the Merger Agreement and the Transactions, including the Merger, are advisable, fair to, and in the best interests of, the Company and the unaffiliated stockholders.

Accordingly, the Board recommends that you vote “FOR” the Merger Proposal to adopt the Merger Agreement at the Annual Meeting.

In the course of evaluating the Merger Agreement and the Transactions, and making the decisions, determinations and recommendations described above, the Special Committee and the Board did not consider the liquidation value of the Company because (1) they considered the Company to be a viable, going concern, (2) they believed that liquidation sales generally result in proceeds substantially less than sales of going concerns, (3) they considered determining a liquidation value to be impracticable given the significant execution risk involved in any breakup of the Company and (4) the Company will continue to operate its business following the Merger. For the foregoing reasons, the Special Committee and the Board did not consider liquidation value to be a relevant methodology. Further, the Special Committee and the Board did not consider net book value, which is an accounting concept, as a factor because they believe that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and because net book value does not take into account the prospects of the Company, market conditions, trends in the industry in which the Company operates or the business risks inherent in that industry. The Special Committee and the Board did not seek to determine a pre-Merger going concern value for the shares of Common Stock to determine the fairness of the Per Share Merger Consideration to the Company’s unaffiliated stockholders. The Special Committee and the Board believed that the trading price of the shares of Common Stock at any given time represents the best available indicator of the Company’s going concern value at that time so long as the trading price at that time is not impacted by speculation regarding the likelihood of a potential transaction.

The Special Committee and the Board are not aware of any firm offer for a merger, sale of all or a substantial part of the Company’s assets, or a purchase of a controlling amount of the Company’s securities having been received by the Company from anyone other than the Parent Parties in the two years preceding the signing of the Merger Agreement.

The foregoing discussion is not exhaustive, but is intended to summarize the material information and factors considered by the Special Committee and the Board in their consideration of the Merger Agreement and the Transactions, including the Merger. The Special Committee and the Board reached the decision to approve the entry into the Merger Agreement and recommend its adoption by the Company’s stockholders in light of the factors described above that the Special Committee and the Board believed were appropriate. In view of the variety of factors and the quality and amount of information considered, the Special Committee and the Board did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching their determinations. In addition, each of the members of the Special Committee and the Board may have given different weight to different factors. The Special Committee and the Board conducted an overall review of the factors described above, including through discussions with the Company’s management and their respective legal and financial advisors, and considered the factors overall to be favorable to, and to support, their decisions, determinations and recommendations. It should be noted that this explanation of the reasoning of the Special Committee and the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section entitled “Cautionary Statement Concerning Forward-Looking Information” beginning on page 66.

Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee

On June 12, 2022, Houlihan Lokey orally rendered its opinion to the Special Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Special Committee dated June 12, 2022), as to the fairness, from a financial point of view and as of such date, of the Merger Consideration to be received by the Unaffiliated Stockholders in the Merger pursuant to the Merger Agreement, which opinion was based on and subject to the various procedures followed, assumptions made, qualifications and limitations on the review undertaken and the other matters considered by Houlihan Lokey in connection with the preparation of its opinion.

Houlihan Lokey’s opinion was directed to the Special Committee (in its capacity as such) and only addressed the fairness, from a financial point of view and as of such date, of the Merger Consideration be received by the Unaffiliated Stockholders in the Merger pursuant to the Merger Agreement and did not address any other aspect or implication of the Merger or any other agreement, arrangement or understanding. The summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex B to this proxy statement and describes certain of the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the Special Committee, the Board, the Company, any security holder or any other person as to how to act or vote with respect to any matter relating to the Merger or otherwise.

In arriving at its opinion, Houlihan Lokey, among other things:

•        reviewed the Merger Agreement, the ModusLink CVR Agreement and certain related documents;

•        reviewed certain publicly available business and financial information relating to the Company that Houlihan Lokey deemed to be relevant;

•        reviewed certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to Houlihan Lokey by the Company, ModusLink, its wholly-owned subsidiary, and the Special Committee, including (a) financial projections prepared by the management of ModusLink, in consultation with the management of the Company, and approved by the Special Committee, relating to ModusLink for the fiscal years ending July 31, 2022 through July 31, 2025 (the “ModusLink Projections”), (b) financial projections prepared by the management of the Company, and approved by the Special Committee, relating to the Company’s corporate expenses for the fiscal years ending July 31, 2022 through July 31, 2025 (the “Corporate Expense Projections”), and (c) certain forecasts and estimates prepared by the management of the Company, and approved by the Special Committee, of the net operating losses of the Company to be utilized by the Company on a standalone basis (the “NOL Projections”, and together with the ModusLink Projections and the Corporate Expense Projections, the “Projections”);

•        spoke with certain members of the management of ModusLink regarding the businesses, operations, financial condition and prospects of ModusLink and related matters;

•        spoke with certain members of the management of the Company regarding the businesses, operations, financial condition and prospects of the Company (including ModusLink), the Merger and related matters;

•        compared the financial and operating performance of ModusLink with that of other public companies deemed to be relevant;

•        considered publicly available financial terms of certain transactions deemed to be relevant;

•        reviewed the current and historical market prices and trading volume for the Common Stock, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies deemed to be relevant; and

•        conducted such other financial studies, analyses and inquiries and considered such other information and factors deemed appropriate.

Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and do not assume any responsibility with respect to such data, material and other information. In addition, (a) management of ModusLink, management of the Company, and the Special Committee advised Houlihan Lokey, and Houlihan Lokey assumed, that the ModusLink Projections had been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management of ModusLink, management of the Company, and the Special Committee as to the future financial results and condition of ModusLink, and (b) management of the Company and the Special Committee advised Houlihan Lokey, and Houlihan Lokey assumed, that each of the Corporate Expense Projections and the NOL Projections had been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the management of the Company and the Special Committee. Houlihan Lokey assumed that the Projections provided a reasonable basis on which to evaluate the Company and the Merger and, with the Special Committee’s approval, used and relied upon the Projections for purposes of Houlihan Lokey’s analyses and opinion. Houlihan Lokey expressed no view or opinion with respect to the ModusLink Projections, the Corporate Expense Projections or the NOL Projections or the respective assumptions on which they are based. In addition, given the uncertainty around events potentially impacting the value of the ModusLink CVRs, at the Special Committee’s direction, Houlihan Lokey did not ascribe any value to the ModusLink CVRs for purposes of Houlihan Lokey’s analyses or opinion and expressed no view or opinion with respect to the value of the ModusLink CVRs. Houlihan Lokey relied upon and assumed, without independent verification, that there was no change in the businesses, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company (including ModusLink) since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would be material to its analyses or opinion, and that there is no information or any facts that would make any of the information reviewed by Houlihan Lokey incomplete or misleading.

Houlihan Lokey further relied upon and assumed, without independent verification, that (a) the representations and warranties of all parties to the Merger Agreement, the ModusLink CVR Agreement and all other related documents and instruments that are referred to therein were true and correct, (b) each party to the Merger Agreement, the ModusLink CVR Agreement and such other related documents and instruments would 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 would be satisfied without waiver thereof, and (d) the Merger would be consummated in a timely manner in accordance with the terms described in the Merger Agreement and such other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey also relied upon and assumed, without independent verification, that (i) the Merger would be consummated in a manner that complies in all respects with all applicable federal and state statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the Merger would be obtained and that no delay, limitations, restrictions or conditions would be imposed or 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 opinion.

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 (including ModusLink) or any other party, nor

was Houlihan Lokey provided with any such appraisal or evaluation. Houlihan Lokey did not estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey did not undertake an independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company was or may be a party or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company was or may be a party or may be subject.

Houlihan Lokey’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date of Houlihan Lokey’s opinion. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to Houlihan Lokey’s attention after the date of its opinion. Houlihan Lokey did not express any opinion as to what the value of the ModusLink CVRs actually will be when issued pursuant to the Merger or the price or range of prices at which the Common Stock or the ModusLink CVRs may be purchased or sold, or otherwise be transferable, at any time.

Houlihan Lokey’s opinion was furnished for the use of the Special Committee (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 has consented to the inclusion of its opinion as Annex B to this proxy statement. Houlihan Lokey’s opinion is not intended to be, and does not constitute, a recommendation to the Special Committee, the Board, any security holder or any other party as to how to act or vote with respect to any matter relating to the Merger or otherwise.

Houlihan Lokey was not been requested to opine as to, and the opinion did not express an opinion as to or otherwise address, among other things: (i) the underlying business decision of the Special Committee, the Company, its respective security holders or any other party to proceed with or effect the Merger, (ii) the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Merger or otherwise (other than the Merger Consideration to the extent expressly specified in Houlihan Lokey’s opinion), (iii) the fairness of any portion or aspect of the Merger to the holders of any class of securities, creditors or other constituencies of the Company, or to any other party, except if and only to the extent expressly set forth in the last sentence of Houlihan Lokey’s opinion, (iv) the relative merits of the Merger as compared to any alternative business strategies or transactions that might be available for the Company, or any other party, (v) the fairness of any portion or aspect of the Merger to any one class or group of the Company’s or any other party’s security holders or other constituents vis-à-vis any other class or group of the Company’s or such other party’s security holders or other constituents (including, without limitation, the allocation of any consideration amongst or within such classes or groups of security holders or other constituents), (vi) whether or not the Company, its security holders or any other party is receiving or paying reasonably equivalent value in the Merger, (vii) the solvency, creditworthiness or fair value of the Company, Parent or any other participant in the Merger, or any of their respective assets, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, or (viii) the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation to or consideration payable to or received by any officers, directors or employees of any party to the Merger, any class of such persons or any other party, relative to the Merger Consideration or otherwise. Furthermore, no opinion, counsel or interpretation was intended in matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. It was assumed that such opinions, counsel or interpretations had been or would be obtained from the appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the Special Committee, on the assessments by the Special Committee, the Company and their respective advisors, as to all legal, regulatory, accounting, insurance, tax and other similar matters with respect to the Company and the Merger or otherwise. The issuance of Houlihan Lokey’s opinion was approved by a committee authorized to approve opinions of this nature.

In performing its analyses, Houlihan Lokey considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of the opinion. No company, transaction or business used in Houlihan Lokey’s analyses for comparative purposes is identical to the Company, ModusLink or the proposed Merger and an evaluation of the results of those analyses is not entirely mathematical. As a consequence, mathematical derivations (such as the high, low, mean and median) of financial data are not by themselves meaningful and in selecting the ranges of multiples to be applied were considered in conjunction with experience and the exercise of judgment. The estimates contained in the financial forecasts prepared by the managements of the Company and ModusLink and the implied reference range values indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any

analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of the Company. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analyses are inherently subject to substantial uncertainty.

Houlihan Lokey’s opinion was only one of many factors considered by the Special Committee in evaluating the proposed Merger. Neither Houlihan Lokey’s opinion nor its analyses were determinative of the Merger Consideration or of the views of the Special Committee or management with respect to the Merger or the Merger Consideration. Under the terms of its engagement as financial advisor to the Special Committee, neither Houlihan Lokey’s opinion nor any other advice or services rendered by it in connection with the proposed Merger or otherwise, should be construed as creating, and Houlihan Lokey should not be deemed to have, any fiduciary duty to, or agency relationships with, any of the Special Committee, the Company, security holders, creditors or other constituencies of the Company or any other person or entity. The type and amount of consideration payable in the Merger were determined through negotiations between the Special Committee and Parent, and the decision to enter into the Merger Agreement was solely that of the Special Committee and the Board.

Financial Analyses

In preparing its opinion to the Special Committee, Houlihan Lokey performed certain financial analyses described below under the heading “— June 12, 2022 Financial Presentation.” The summary of Houlihan Lokey’s analyses is not a complete description of the analyses underlying Houlihan Lokey’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither Houlihan Lokey’s opinion nor its underlying analyses is readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. While the results of each analysis were taken into account in reaching Houlihan Lokey’s overall conclusion with respect to fairness, Houlihan Lokey did not make separate or quantifiable judgments regarding individual analyses. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s analyses and opinion.

The following is a summary of the material financial analyses performed by Houlihan Lokey in connection with the preparation of its opinion and reviewed with the Special Committee on June 12, 2022. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Houlihan Lokey’s analyses.

Introduction

For purposes of its analyses, Houlihan Lokey reviewed a number of financial metrics, including:

•        Enterprise Value — generally, the value as of a specified date of the relevant company’s equity market value plus debt outstanding, preferred stock and minority interests and less cash and cash equivalents, based on reported fully-diluted shares; and

•        Adjusted EBITDA — generally, the amount of the relevant company’s earnings before interest, taxes, depreciation and amortization, as adjusted for certain non-recurring items, for a specified time period.

Unless the context indicates otherwise, enterprise values and equity values used in the selected companies analysis described below were calculated using the closing price of the common stock of the selected companies listed below as of June 9, 2022, and transaction values for the selected transactions analysis described below were calculated on an enterprise value basis based on the announced transaction equity price and other public information available at the time of the announcement. The estimates of the future financial performance of the selected companies listed below were based on certain publicly available research analyst estimates for those companies.

June 12, 2022 Financial Presentation

Selected Companies Analysis

Houlihan Lokey reviewed certain data for selected companies, with publicly traded equity securities, that Houlihan Lokey deemed relevant for purposes of its financial analyses related to ModusLink. The selected companies included companies in the supply chain and third-party logistics services industry, whose business models and operations exhibit certain similarities to those of ModusLink (collectively, the “selected companies”) and were selected based on Houlihan Lokey’s professional judgement and experience. Houlihan Lokey focused on companies with asset light third-party logistics business models that provide outsourced services across a number of functions within global supply chains. The selected companies and corresponding financial data (as further described herein) were as follows:

The financial data reviewed included:

•        For illustrative purposes only, Enterprise Values as a multiple of latest 12 months Adjusted EBITDA;

•        Enterprise Values as a multiple of estimated fiscal year 2022 (referring to the Company’s fiscal year ending July 31, 2022) Adjusted EBITDA; and

•        Enterprise Values as a multiple of estimated fiscal year 2023 (referring to the Company’s fiscal year ending July 31, 2023) Adjusted EBITDA.

The overall low to high latest 12 months Adjusted EBITDA (for illustrative purposes only), fiscal year 2022 estimated Adjusted EBITDA and fiscal year 2023 estimated Adjusted EBITDA multiples (and median and mean multiples) observed for the selected companies were as follows:

Taking into account the results of the selected companies analysis, Houlihan Lokey applied selected multiple ranges of 4.0x to 6.0x latest 12 months Adjusted EBITDA (for illustrative purposes only), 4.0x to 6.0x fiscal year 2022 estimated Adjusted EBITDA and 4.0x to 6.0x fiscal year 2023 estimated Adjusted EBITDA in each case to corresponding financial data for ModusLink, and in the case of fiscal year 2022 estimated Adjusted EBITDA and fiscal year 2023 estimated Adjusted EBITDA based on the ModusLink Projections. The selected companies analysis (after taking into account the outstanding balance of ModusLink cash and cash equivalents as of April 30, 2022) indicated implied ModusLink equity value reference ranges of $53.2 million to $72.3 million based on the selected range of multiples of latest 12 months Adjusted EBITDA (for illustrative purposes only), $58.4 million to $80.2 million based on the selected range of multiples of fiscal year 2022 estimated Adjusted EBITDA and $84.9 million to $119.9 million based on the selected range of multiples of fiscal year 2023 estimated Adjusted EBITDA. Houlihan Lokey then deducted the present value of corporate expenses based on the Corporate Expense Projections, added the present value

Taking into account the results of the selected transactions analysis, Houlihan Lokey applied a selected multiple range of 5.0x to 7.0x latest 12 months Adjusted EBITDA to the fiscal year 2022 estimated Adjusted EBITDA for ModusLink based on the ModusLink Projections. The selected transactions analysis indicated an implied ModusLink equity value reference range (after taking into account the outstanding balance of ModusLink cash and cash equivalents as of April 30, 2022) of $69.3 million to $91.1 million based on the selected range of multiples of fiscal year 2022 estimated Adjusted EBITDA. Houlihan Lokey then deducted an estimate of hypothetical wind-down/severance cash outlays to liquidate the corporate entity per Company management, added the present value of the NOLs based on the NOL Projections and incorporated the impact of the outstanding balances of cash and cash equivalents, IWCO subordinated note, convertible note payable, and Series C convertible preferred stock as of April 30, 2022 to arrive at an implied per share value reference range of $0.84 to $1.27 per share of Common Stock based on the selected range of multiples applied to fiscal year 2022 estimated Adjusted EBITDA, as compared to the Per Share Merger Consideration.

Discounted Cash Flow Analysis

Houlihan Lokey performed a discounted cash flow analysis of ModusLink by calculating the estimated net present value of the projected unlevered, free cash flows that ModusLink was forecasted to generate for the fiscal year ending July 31, 2022 through the fiscal year ending July 31, 2025 based on the ModusLink Projections. Houlihan Lokey calculated terminal values for ModusLink by applying a range of perpetuity growth rates of 0.0% to 2.0% to ModusLink’s fiscal year 2025 estimated unlevered, free cash flow. The net present values of the Company’s projected future cash flows and terminal values were then calculated using discount rates ranging from 13.0% to 15.0%. The discounted cash flow analysis (after taking into account the outstanding balance of ModusLink cash and cash equivalents as of April 30, 2022) indicated an implied ModusLink equity value reference range of $92.4 million to $117.5 million. Houlihan Lokey then deducted the present value of corporate expenses based on the Corporate Expense Projections, added the present value of the NOLs based on the NOL Projections and incorporated the impact of the outstanding balances of cash and cash equivalents, IWCO subordinated note, convertible note payable, and Series C convertible preferred stock as of April 30, 2022 to arrive at an implied per share value reference range of $0.78 to $1.12 per share of Common Stock, as compared to the Per Share Merger Consideration.

Preliminary Discussion Materials

In addition to the June 12, 2022 financial presentation provided to the Special Committee in connection with Houlihan Lokey’s opinion, dated June 12, 2022, to the Special Committee as summarized above, Houlihan Lokey also provided, for informational purposes, certain preliminary discussion materials to the Special Committee as summarized below. At the request of the Special Committee, extracts and/or summaries of certain information from the June 12, 2022 financial presentation and such preliminary discussion materials also were provided to the Board for informational reference.

The preliminary financial considerations and other information in the preliminary discussion materials reflected market data as of dates proximate to such materials and were based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and information, including tax information relating to the Company, made available to Houlihan Lokey as of, the date of such materials. Accordingly, to the extent preliminary financial analyses or information were included in such preliminary discussion materials, such preliminary financial analyses or information may have differed from the June 12, 2022 financial presentation as a result of, among other things, the disposition by the Company of IWCO, changes in the Company’s, ModusLink’s and IWCO’s internal financial forecasts, estimates and assumptions, such financial, economic, monetary, market and other conditions and circumstances and other information. Houlihan Lokey also continued to refine various aspects of such preliminary financial considerations and other information. The June 12, 2022 financial presentation superseded the preliminary discussion materials. None of the preliminary discussion materials constituted an opinion of, or recommendation by, Houlihan Lokey with respect to a possible transaction or otherwise.

•        April 4, 2022 Preliminary Discussion Materials.    The April 4, 2022 preliminary discussion materials were substantially similar to the June 12, 2022 financial presentation and contained, among other things; (i) selected observations relating to recent financial performance and latest outlook for the ModusLink business based on financial projections provided by and discussions with ModusLink management; (ii) selected observations relating to recent stock price performance for the Company; (iii) selected observations relating to implied per share consideration for the Company based on illustrative premiums to the Company’s closing share price/volume-weighted average price (“VWAP”); and (iv) a preliminary selected companies analysis, a preliminary selected transactions analysis and a preliminary discounted cash

flow analysis, which preliminary analyses generally used the same methodologies as described above under the heading “— June 12, 2022 Financial Presentation.” In addition, the April 4, 2022 preliminary discussion materials also included certain sensitivities related to Company corporate expenses and net operating losses.

•        January 10, 2022 Preliminary Discussion Materials.    The January 10, 2022 preliminary discussion materials included, among other things: (i) an update of the Company’s, IWCO’s and ModusLink’s financial performance based on the Company’s public filings, financial projections provided by and discussions with Company, IWCO and ModusLink management; (ii) selected observations relating to recent stock price performance for the Company; (iii) selected observations relating to implied premiums/(discounts) to the Company’s closing share price/VWAP, based on illustrative per share consideration amounts; (iv) a preliminary selected companies analysis, a preliminary selected transactions analysis and a preliminary discounted cash flow analysis; (v) selected changes relative to the preliminary financial analyses in the September 9, 2021 Preliminary Discussion Materials; (vi) an overview of IWCO and ModusLink historical and projected financial information, based on public filings and information provided by Company, IWCO and ModusLink management, including observations of revenue, long-term value added-revenue, profitability and gross profit; (vii) an overview of certain trading data for the Company, which included, among other things, average daily trading values and VWAPs for Common Stock during various periods, as well as overall recent trading activity; and (viii) selected observations relating to implied per share consideration for the Company based on illustrative premiums to the Company’s closing share price/VWAP.

•        October 21, 2021 Preliminary Discussion Materials.    The October 21, 2021 preliminary discussion materials included, among other things: (i) an update of financial projections of IWCO and ModusLink to October 2021 based on discussions with Company, IWCO and ModusLink management; (ii) an overview of certain trading data for the Company, which included, among other things, average daily trading values and VWAPs for Common Stock during various periods, as well as overall recent trading activity; (iii) selected observations relating to implied per share consideration for the Company based on illustrative premiums to the Company’s closing share price/VWAP; and (iv) selected observations relating to implied premiums/(discounts) to the Company’s closing share price/VWAP, based on illustrative per share consideration amounts.

•        September 9, 2021 Preliminary Discussion Materials.    The September 9, 2021 preliminary discussion materials included, among other things: (i) a preliminary selected companies analysis, a preliminary selected transactions analysis and a preliminary discounted cash flow analysis; (ii) an overview of IWCO and ModusLink historical and projected financial information, based on public filings and information provided by Company, IWCO and ModusLink management, including observations of revenue, long-term value added-revenue, profitability and gross profit; (iii) an overview of the Initial Proposal; (iv) an overview of certain trading data for the Company, which included, among other things, average daily trading values and VWAPs for Common Stock during various periods, as well as overall recent trading activity; and (v) selected observations relating to implied per share consideration for the Company based on illustrative premiums to the Company’s closing share price/VWAP.

•        March 31, 2021 Preliminary Discussion Materials.    The March 31, 2021 preliminary discussion materials included, among other things: (i) an overview of certain trading data for the Company, which included, among other things, average daily trading values and VWAPs for Common Stock during various periods, and the performance of Common Stock against the S&P 500 Index from March 2020 to February 2021, as well as overall recent trading activity; (ii) an overview of IWCO’s and ModusLink’s historical financial information and near-term forecasts based on public filings and information provided by Company, IWCO and ModusLink management; and (iii) selected observations relating to certain communications received from Company shareholders.

•        March 9, 2021 Preliminary Discussion Materials.    The March 9, 2021 preliminary discussion materials included, among other things: (i) preliminary financial and profitability observations regarding ModusLink, based on public filings and information provided by Company and ModusLink management, including observations of revenue, long-term value added-revenue, profitability and gross profit; (ii) a summary comparison of ModusLink’s fiscal year 2021 forecast and original budget, based on discussions with Company and ModusLink management; (iii) a comparison of financial projections prepared by ModusLink management to a prior set of projections developed in connection with a

refinancing process undertaken in September 2020, based on discussions with Company management; (iv) observations relating to the ModusLink Sale Process (defined herein) to date; and (v) an overview of updates and next steps regarding the process for responding to the Initial Proposal.

Miscellaneous

Houlihan Lokey was engaged as the Special Committee’s financial advisor. The Special Committee engaged Houlihan Lokey based on Houlihan Lokey’s experience and reputation. Houlihan Lokey is regularly engaged to provide financial advisory services in connection with mergers and acquisitions, financings, and financial restructurings. Pursuant to its engagement by the Special Committee, Houlihan Lokey is entitled to a fee of up to $3,125,000 for its services, $150,000 of which became payable upon the execution of Houlihan Lokey’s engagement letter, $950,000 of which was paid over the course of Houlihan Lokey’s engagement as monthly retainer payments, $500,000 of which became payable upon delivery of Houlihan Lokey’s opinion (which portion is not contingent upon the consummation of the Merger), $325,000 of which became payable upon commencement of Houlihan Lokey’s outreach activities in connection with the go-shop, $200,000 of which would be contingent upon Houlihan Lokey delivering another opinion in connection with an alternative transaction to the Merger, in the event of such alternative transaction, and up to $1,000,000 of which is contingent upon consummation of the Merger. The Company has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates and certain related parties against certain liabilities and expenses, including certain liabilities under the federal securities laws, arising out of or related to Houlihan Lokey’s engagement.

In the ordinary course of business, certain of Houlihan Lokey’s employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, Parent, or any other party that may be involved in the Merger and their respective affiliates or security holders or any currency or commodity that may be involved in the Merger.

Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other financial or consulting services to the Company, Parent, other participants in the Merger or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be 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, 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.

The Parent Group Members’ Purposes and Reasons for the Merger

Under the SEC rules governing “going private” transactions, each Parent Group Member is deemed to be engaged in a “going private” transaction and, therefore, is required to express his, her or its reasons for the Merger to the unaffiliated stockholders, as defined in Rule 13e-3 of the Exchange Act. Each Parent Group Member is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

For each Parent Group Member, the primary purpose of the Merger is to acquire, through Parent, all shares of Common Stock not owned by them to benefit from any future earnings and growth of the Company after the Merger of Merger Sub with and into the Company, making the Company a wholly owned subsidiary of Parent. The Parent Group believes that structuring the transaction in such manner is preferable to other transaction structures because (i) it will enable Parent to directly acquire all of the outstanding shares of the Company at the same time (other than Excluded Shares and Dissenting Shares), (ii) it will allow the Company to cease to be a publicly registered and reporting company and (iii) it represents an opportunity for the Company’s stockholders other than the Parent Group to immediately realize the value of their investment in the Company. Further, the Parent Group believes that structuring the transaction as a merger transaction provides a prompt and orderly transfer of ownership of the Company in a single step, without the necessity of financing separate purchases of Common Stock in a tender offer and implementing a second-step merger to acquire any Common Stock not tendered into any such tender offer, and without incurring any additional transaction costs associated with such activities.

The Parent Group also believes, in light of the current risks and uncertainties relating to the Company’s prospects and the market, economic and other risks, that it is in the best interests of the Parent Group for the Company to operate as a wholly owned subsidiary of Parent. As a wholly owned subsidiary of Parent, the Company will have greater operational and business flexibility, and the Company’s management will have the ability to more effectively concentrate on operational matters and long-term growth.

In addition, by becoming a wholly owned subsidiary of Parent upon completion of the Merger, the Company will be immediately relieved of many of the other expenses, burdens and constraints imposed on companies that are subject to the public reporting requirements under the federal securities laws of the U.S., including the Exchange Act and Sarbanes-Oxley Act of 2002, which instead will be handled by Parent. Moreover, Parent intends to integrate and rationalize various aspects of the managerial and legal structures of the Company with those of other members of the Parent Group as well as to achieve economies of scale with respect to purchasing and treasury management functions. Finally, as a wholly owned subsidiary of Parent, the Company may be in a position to better utilize its deferred tax assets, which would benefit the Parent Group and Steel Connect.

Each of the Parent Group Members has undertaken to pursue the Merger at this time in order to begin to realize the benefits set forth above as expeditiously as possible, as a large portion of the expenses of the Company operating separately is borne by the Parent Group Members. In addition, the Parent Group Members were motivated by the fact that the Company was willing at this time to enter into the Merger Agreement at the Per Share Merger Consideration negotiated by the Special Committee.

The Board of Directors of Steel Partners Holdings GP, Inc., the general partner of the Company, has approved the Merger Agreement and the Transactions. The Parent Group also considered a variety of potentially negative factors to it concerning the Merger Agreement and the Merger, which are listed below, although not listed in any relative order of importance:

•        all of the risk of any possible decreases in the Company’s revenues, free cash flow or value following the Merger will be borne by the Parent Group;

•        risks associated with pending legal proceedings and possible adverse regulatory changes against the Company will be borne by the Parent Group;

•        the business risks facing the Company, including increased competition, will be borne by the Parent Group;

•        an investment in the surviving corporation by the Parent Group following the Merger will involve substantial risk resulting from the limited liquidity of such an investment; and

•        there will be no trading market for the surviving corporation’s equity securities following the Merger.

The foregoing discussion of the information and factors considered by the Parent Group is not intended to be exhaustive, but includes the material factors considered by the Parent Group. In view of the variety of factors considered in connection with its evaluation of the Merger, the Parent Group did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. The Parent Group did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Parent Group based its determination on the totality of the information presented.

Position of the Parent Group as to Fairness of the Merger

Under the SEC rules governing “going private” transactions, each of the Parent Group Members is required to express his, her or its belief as to the fairness of the Merger to the unaffiliated stockholders. Each of the Parent Group Members is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

The Parent Group has interests in the Merger that are different from those of the other stockholders of the Company by virtue of its continuing interests in the surviving corporation after the completion of the Merger. The Parent Group attempted to negotiate with the Special Committee the terms of a transaction that would be most favorable to the Parent Group, and not necessarily to the Company’s unaffiliated stockholders, and, accordingly, did not negotiate the Merger Agreement with a goal of obtaining terms that were fair to such unaffiliated stockholders. The Special Committee consists of two directors of the Company who are not affiliated with the Parent Group Members, are not employees of the

Company or any of its affiliates and have no financial interest in the Merger different from, or in addition to, the interests of the Company’s unaffiliated stockholders other than their interests described under “Special Factors — Interests of Steel Connect’s Directors and Executive Officers in the Merger” beginning on page 54. Accordingly, the Parent Group believes that the members of the Special Committee are independent and disinterested directors of the Company.

The Parent Group did not participate in the deliberations of the Special Committee regarding, or receive any advice from the Special Committee’s independent legal or financial advisors as to, the substantive or procedural fairness of the Merger to the Company’s unaffiliated stockholders. The Parent Group has not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purposes of assessing the fairness of the Merger to the Company’s unaffiliated stockholders. No financial advisor provided the Parent Group with any analysis, opinion or appraisal with respect to the fairness of the Per Share Merger Consideration to the unaffiliated stockholders.

Based on its knowledge and analysis of available information regarding the Company, as well as the factors considered by, and the analyses and resulting conclusions of, the Special Committee and the Board discussed under “Special Factors — Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 27, each Parent Group Member believes that the Merger is substantively and procedurally fair to the unaffiliated stockholders based on its consideration of the following factors, which are not listed in any relative order of importance:

•        the Special Committee, consisting entirely of independent directors who are not officers or employees of the Company and who are not affiliated with any member of the Parent Group, was established and given authority to, among other things, review, evaluate and negotiate the terms of the Merger and to recommend to the Board what action should be taken by the Company, including not to engage in the Merger;

•        members of the Special Committee do not have any interests in the Merger different from, or in addition to, those of the unaffiliated stockholders, other than (i) the directors’ receipt of board compensation in the ordinary course, (ii) the Special Committee members’ compensation in connection with its evaluation of the Merger (which is not contingent upon the completion of the Merger or recommendation of the Merger by the Special Committee or the Board) and (iii) the directors’ indemnification and liability insurance rights under the Merger Agreement and their corresponding indemnification agreements;

•        the Special Committee retained and was advised by its legal and financial advisors who are experienced in advising committees such as the Special Committee in similar transactions;

•        the Special Committee was deliberate in its process, taking over several months to determine whether the Merger was in the best interest of the Company’s unaffiliated stockholders and to analyze, evaluate and negotiate the terms of the Merger;

•        the Parent Group did not participate in or seek to influence the deliberative process of, or the conclusions reached by, the Special Committee or the negotiating positions of the Special Committee;

•        the Special Committee and the Board had no obligation to recommend the approval and adoption of the Merger Agreement and the Transactions, including the Merger, or any other transaction;

•        the Special Committee and the Board was fully informed about the extent to which the interests in the Merger of certain stockholders of the Company who are also Parent Group Members differed from those of the unaffiliated stockholders;

•        the Special Committee and the Board, acting upon the unanimous recommendation of the Special Committee, determined that the Merger Agreement and the Transactions, including the Merger, are advisable and fair to, and in the best interests of, the unaffiliated stockholders;

•        the current and historical market prices of the shares of Common Stock, including the fact that the Per Share Cash Merger Consideration represents a premium of (i) approximately 90.1% over the closing price of the shares of Common Stock of $0.71 on November 19, 2020, the last trading day prior to the public disclosure that Parent had delivered a non-binding expression of interest regarding a potential combination of the Company and Parent for consideration consisting of cash and units of Parent’s 6% Series A Preferred Units that would imply a value per share of Common Stock in the range of $0.65 to $0.72, (ii) a premium of 11.6% over the closing price of the shares of Common Stock of $1.21 on

June 10, 2022, the last trading day prior to the public announcement of the Merger, and (iii) a premium of approximately 9.3% over the 30 trading-day average closing price of the shares of Common Stock as of June 10, 2022, the last trading day prior to the public announcement of the Merger Agreement;

•        the shares of Common Stock traded as low as $0.92 per share during the 52-week period prior to the announcement of the execution of the Merger Agreement on June 12, 2022;

•        the Per Share Cash Merger Consideration is all cash, which allows the unaffiliated stockholders to immediately realize certainty of value and liquidity without incurring brokerage and other costs typically associated with market sales (including the limited trading liquidity for the shares of Common Stock on Nasdaq) and allows the unaffiliated stockholders not to be exposed to risks and uncertainties relating to the prospects of the Company;

•        the ModusLink CVR represents a further opportunity for unaffiliated stockholders to participate in upside from a sale of ModusLink during the 24-month period following the closing of the Merger if the proceeds of such sale exceed $80 million plus certain related costs and expenses;

•        the Per Share Merger Consideration and the other terms and conditions of the Merger Agreement and the Transactions, including the Merger, were the result of extensive negotiations over an extended period of time between the Special Committee and its advisors on the one side and the Parent Group and its advisors on the other side;

•        notwithstanding that the Parent Group may not rely upon the opinion provided by Houlihan Lokey to the Special Committee, the Special Committee received its oral opinion from Houlihan Lokey, which was subsequently confirmed in writing dated effective June 12, 2022, as to the fairness, from a financial point of view, of the Per Share Merger Consideration to be received by the unaffiliated stockholders in the Merger, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion;

•        the recognition of the potential disadvantages that the Company would continue to face as an SEC-reporting public company, including continuing to be subject to the (i) regulatory compliance costs and (ii) requirement to disclose a considerable amount of business information to the public, some of which would otherwise be considered competitively sensitive and would not be disclosed by a non-reporting company;

•        the Merger Agreement requires that it be adopted not only by the affirmative vote of the holders of (i) a majority of the outstanding shares of Series C Preferred Stock and (ii) a majority in voting power of the outstanding shares of Common Stock and Series C Preferred Stock (voting on an as converted to shares of Common Stock basis), voting together as a single class, but also (iii) a majority of the outstanding shares of Common Stock not owned, directly or indirectly, by the Parent Parties, any other officers or directors of the Company or any other person having any equity interest in, or any right to acquire any equity interest in, Merger Sub or any person of which Merger Sub is a direct or indirect subsidiary;

•        subject to compliance with the Merger Agreement and prior to receipt of the Requisite Stockholder Approval, the ability of the Board or the Special Committee to participate in discussions or negotiations with, or provide non-public information to, any person in response to an unsolicited Takeover Proposal for the Company, if the Board or the Special Committee determines, after consultation with outside legal counsel, that such Takeover Proposal is reasonably likely to lead to a Superior Proposal (defined herein);

•        the ability of the Company to actively solicit and consider alternative acquisition proposals during the Go-Shop Period;

•        the ability of the Board or the Special Committee, subject to certain conditions, to make a change in the Board Recommendation;

•        modest Expense Reimbursement and Termination Fees payable by the Company to Parent if the Merger Agreement is terminated under certain circumstances;

•        the Company, under certain circumstances as set out in the Merger Agreement, is able to specifically enforce the terms of the Merger Agreement;

•        the Merger is not conditioned on any financing being obtained by Parent, thus increasing the likelihood that the Merger will be consummated and the Per Share Merger Consideration will be paid to the unaffiliated stockholders; and

•        the ability of the Company’s stockholders to exercise appraisal rights under Section 262 of the DGCL, which provides such stockholders with the opportunity to have the Delaware Court of Chancery determine the “fair value” (as defined pursuant to Section 262 of the DGCL) of their shares of Company Stock (which may be more than, less than or the same as the amount such stockholders would have received under the Merger Agreement) and to receive payment based on that valuation in lieu of receiving the Per Share Merger Consideration.

The Parent Group did not consider the Company’s net book value, which is defined as total assets minus total liabilities, as a factor. The Parent Group believes that net book value, which is an accounting concept based on historical costs, is not a material indicator of the value of the Company as a going concern because it does not take into account the future prospects of the Company, market conditions, trends in the industry in which the Company conducts its business or the business risks inherent in competing with other companies in the same industry.

In its consideration of the fairness of the Merger, the Parent Group did not consider the Company’s liquidation value to be a relevant valuation method because it considers the Company to be a viable, going concern business where value is derived from cash flows generated from its continuing operations and because the Company plans to continue to operate its business following the Merger.

The Parent Group did not seek to establish a pre-Merger going concern value for the shares of Common Stock to determine the fairness of the Per Share Merger Consideration to the unaffiliated stockholders. However, to the extent the pre-Merger going concern value was reflected in the pre-announcement price of the shares of Common Stock, the Per Share Merger Consideration represented (i) a premium of 11.6% over the closing price of the shares of Common Stock of $1.21 on June 10, 2022, the last trading day prior to the public announcement of the Merger, and (ii) a premium of approximately 9.3% over the 30 trading-day average closing price of the shares of Common Stock as of June 10, 2022.

Except as described in “Special Factors — Background of the Merger,” none of the Parent Group Members is aware of, and thus did not consider in its fairness determination, any offers or proposals made by any unaffiliated third parties with respect to (a) a merger or consolidation of the Company with or into another company, (b) a sale of all or a substantial part of the Company’s assets or (c) the purchase of the Company’s voting securities that would enable the holder to exercise control over the Company.

The Parent Group did not perform or receive any independent reports, opinions or appraisals from any third party related to the Merger, and thus did not consider any such reports, opinions or appraisals in determining the substantive and procedural fairness of the Merger to the unaffiliated stockholders.

The foregoing is a summary of the information and factors considered and given weight by each of the Parent Group Members in connection with its evaluation of the substantive and procedural fairness of the Merger to the unaffiliated stockholders, which is not intended to be exhaustive, but includes all material factors considered by the Parent Group. The Parent Group did not find it practicable to assign, and did not assign, relative weights to the individual factors considered in reaching their conclusion as to the substantive and procedural fairness of the Merger to the unaffiliated stockholders. Rather, its fairness determination was made after consideration of all of the foregoing factors as a whole.

Each of the Parent Group Members believes these factors provide a reasonable basis for its belief that the Merger is substantively and procedurally fair to the unaffiliated stockholders. This belief should not, however, be construed as a recommendation to any stockholder of the Company to vote in favor of the proposal to adopt the Merger Agreement. None of the Parent Group Members makes any recommendation as to how stockholders of the Company should vote their shares of Common Stock on the proposal to adopt the Merger Agreement.

Plans for Steel Connect After the Merger

It is expected that Steel Connect’s operations will be conducted after the Merger substantially as they currently are being conducted, except that it will cease to be a publicly traded company and will instead be a wholly owned subsidiary of Parent. Following the consummation of the Merger, the Company will no longer be subject to the Exchange Act and Nasdaq compliance and reporting requirements along with the related direct and indirect costs and expenses, and may experience positive effects on profitability as a result of the elimination of such costs and expenses.

The directors of Merger Sub will be the directors of Steel Connect immediately following the Merger. The officers of Merger Sub will be the officers of Steel Connect immediately following the Merger.

The Parent Group Members have advised Steel Connect that they do not have any current intentions, plans or proposals to cause Steel Connect to engage in any of the following:

•        an extraordinary corporate transaction with a third party such as a merger;

•        the relocation of any material operations or sale or transfer of a material amount of assets; or

•        any other material changes in its business.

Nevertheless, following the consummation of the Merger, the surviving corporation’s management and board of directors may implement a legal and management reorganization to combine and align the operations of Steel Connect with other operations owned by Parent. The surviving corporation’s management and board of directors may further initiate a review of Steel Connect and its assets, corporate and capital structure, capitalization, operations, business, properties and personnel to determine what additional changes, if any, would be desirable following the Merger to enhance the business and operations of Steel Connect and may cause Steel Connect to engage in the types of transactions set forth above if the management or the board of directors decides that such transactions are in the best interest of Steel Connect upon such review. The Parent Group Members expressly reserve the right to make any changes to Steel Connect operations after consummation of the Merger that they deem appropriate in light of such evaluation and review or in light of future developments.

Certain Effects of the Merger

If the Merger Agreement is adopted by the Requisite Stockholder Approval and the other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will be merged with and into Steel Connect, the separate corporate existence of Merger Sub will cease and Steel Connect will continue its corporate existence under Delaware law as the surviving corporation in the Merger, with all of its rights, privileges, immunities, powers and franchises continuing unaffected by the Merger.

Upon consummation of the Merger, each share of Common Stock issued and outstanding immediately prior to the Effective Time of the Merger (other than Excluded Shares and Dissenting Shares) will immediately be converted into the right to receive the Per Share Merger Consideration, without interest and less applicable withholding taxes.

Following the Merger, the entire equity in the surviving corporation will ultimately be owned by Parent. If the Merger is completed, the Parent Group Members will be the sole beneficiaries of Steel Connect’s future earnings and growth, if any (except for any payments in respect of the ModusLink CVR), and will be entitled to vote on corporate matters affecting Steel Connect following the Merger. Similarly, the Parent Group Members will also bear the risks of ongoing operations, including the risks of any decrease in Steel Connect’s value after the Merger.

If the Merger is completed, Steel Connect’s unaffiliated stockholders will have no interest in Steel Connect’s net book value or net earnings. Based on the 2021 Annual Report, the table below sets forth the direct and indirect interests in Steel Connect’s net book value and net earnings of the Parent Group Members as of and for the year ended July 31, 2021, and what those interests would have been had the Merger been completed as of that date.

____________

(1)      Ownership percentages are based on shares of Common Stock outstanding as of June 12, 2022, the date of the Merger Agreement.

A primary benefit of the Merger to Steel Connect’s stockholders (other than the Parent Group Members) will be the right of such stockholders to receive the Per Share Merger Consideration as described above. The Per Share Cash Merger Consideration represents a premium of approximately (i) 90.1% over the closing price of the shares of Common Stock of $0.71 on November 19, 2020, the last trading day prior to the public disclosure that Parent

had delivered a non-binding expression of interest regarding a potential combination of the Company and Parent for consideration consisting of cash and units of Parent’s 6% Series A Preferred Units that would imply a value per share of Common Stock in the range of $0.65 to $0.72, (ii) 11.6% over the closing price of the shares of Common Stock of $1.21 on June 10, 2022, the last trading day prior to the public announcement of the Merger, and (iii) of approximately 9.3% over the 30 trading-day average closing price of the shares of Common Stock as of June 10, 2022, the last trading day prior to the public announcement of the Merger Agreement.

The primary detriments of the Merger to such stockholders include the lack of interest of such stockholders in Steel Connect’s potential future earnings, growth or value (other than the ModusLink CVR). Additionally, the receipt of cash in exchange for shares of Common Stock pursuant to the Merger will generally be a taxable sale transaction for U.S. federal income tax purposes to our stockholders who surrender shares of Common Stock in the Merger, as described further under the section entitled “Special Factors — Material U.S. Federal Income Tax Consequences of the Merger.”

In connection with the Merger, the Parent Group Members will receive benefits and be subject to obligations that are different from, or in addition to, the benefits received by Steel Connect’s stockholders generally. The primary benefits of the Merger to the Parent Group Members, based on their ownership of all the equity interests in Parent, include their indirect interest in Steel Connect’s potential future earnings and growth which, if they successfully execute their business strategies, could be substantial. Additionally, following the Merger, Steel Connect will be a private company, and as such will be relieved of the burdens imposed on companies with publicly traded equity, including the requirements and restrictions on trading that Steel Connect’s directors, officers and beneficial owners of more than 10% of the outstanding shares of Common Stock face as a result of the provisions of Section 16 of the Exchange Act. Finally, as a wholly owned subsidiary of Parent, the Company may be in a position to better utilize its deferred tax assets.

The primary detriments of the Merger to the Parent Group Members include the fact that all of the risk of any possible decrease in Steel Connect’s earnings, growth or value following the Merger will be borne by Parent. Additionally, the investment by the Parent Group Members in Parent and Steel Connect will not be liquid, with no public trading market for such securities.

In connection with the Merger, certain members of Steel Connect’s management will receive benefits and be subject to obligations that may be different from, or in addition to, the benefits and obligations of Steel Connect’s stockholders generally, as described in more detail under “Special Factors — Interests of Steel Connect’s Directors and Executive Officers in the Merger” beginning on page 54. Those incremental benefits are expected to include, among others, certain executive officers continuing as executive officers of the surviving corporation.

Our Common Stock is currently registered under the Exchange Act and quoted on Nasdaq under the symbol “STCN.” As a result of the Merger, Steel Connect will be a wholly owned by Parent and there will be no public market for Steel Connect’s shares. After the Merger, the shares of Common Stock will cease to be listed on Nasdaq and price quotations with respect to sales of shares of Common Stock in the public market will no longer be available. In addition, registration of the shares of Common Stock under the Exchange Act will be terminated.

At the Effective Time, the Certificate of Incorporation and the Bylaws of Steel Connect shall continue to be the certificate of incorporation and bylaws of Steel Connect following the Merger until thereafter amended in accordance with their respective terms and the DGCL.

Projected Financial Information

Our management prepares projections with respect to the Company’s future financial performance as part of its ongoing management of the business. The Company does not, as a matter of course, make available to the public future financial projections due to the inherent uncertainty of any underlying assumptions and estimates. However, the Company is including in this proxy statement a summary of certain unaudited prospective financial and operating information that was prepared by our management in connection with discussions regarding the proposed transaction and made available to the Board from time to time, to the Special Committee, to Houlihan Lokey in connection with the Special Committee’s consideration of the Company’s stand-alone prospects and potential strategic transactions available to the Company, as well as, to the Parent Parties. The inclusion of the below

information should not be regarded as an indication that any of the Special Committee, Steel Connect, the Parent Parties, Houlihan Lokey or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.

The unaudited prospective financial information prepared by management consists of: (a) long-term financial projections for ModusLink for each of the fiscal years 2022 through 2025, which were prepared by ModusLink management in consultation with management of Steel Connect in February 2021 and updated by ModusLink management in May 2022 with respect to fiscal year 2022 based on ModusLink’s budgeting process and year-to-date performance through April 2022 (the “ModusLink Projections”); (b) corporate expense projections for each of the fiscal years 2022 through 2025, which were prepared by Steel Connect management and updated by Steel Connect management in May 2022 to reflect savings opportunities identified following the disposition of IWCO (the “Corporate Expense Projections”); and (c) estimates of taxable income and assumptions for the utilization of our net operating losses (“NOLs”) that were prepared by Steel Connect management (the “NOL Projections” and, together with the ModusLink Projections and the Corporate Expense Projections, the “Projections”).

The Projections were prepared without giving effect to the Merger, including the impact of negotiating or executing the Merger, the expenses that may be incurred in connection with consummating the Merger, the potential synergies that may be achieved as a result of the Merger, or the effect of any business or strategic decision or action that has been or will be taken as a result of the Merger Agreement having been executed.

The accompanying Projections were not prepared with a view toward public disclosure or with a view toward compliance with the published guidelines established by the SEC or the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information, generally accepted accounting principles (“GAAP”), but, in the view of Steel Connect’s management, were prepared on a reasonable basis, reflected the best available estimates and judgments at the time of preparation, and presented as of the time of preparation, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Steel Connect and its subsidiaries on a standalone basis as described above and subject to the assumptions and limitations described in this section. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement are cautioned not to place undue reliance on the Projections. Although Steel Connect’s management believes there is a reasonable basis for the Projections, the Company cautions stockholders that future results could be materially different from the Projections. The Projections were made available to the Special Committee and its financial advisor, Houlihan Lokey, and are the projections used by Houlihan Lokey in connection with its financial analyses and opinion as described in “Special Factors — Opinion of Houlihan Lokey Capital, Inc., Financial Advisor to the Special Committee,” beginning on page 35. This summary of the Projections is not being included in this proxy statement to influence your decision whether to vote for the Merger Proposal, but because these Projections were made available to the Special Committee, Houlihan Lokey and the Board for purposes of considering and evaluating the Merger and the Merger Agreement as discussed above in “Special Factors — Background of the Merger” beginning on page 17. Neither the Company’s independent registered public accounting firm, BDO USA, LLP, nor any other independent accountants have examined, compiled or performed any procedures with respect to the projected financial information or any amounts derived therefrom or built thereupon and, accordingly, they have not expressed any opinion or given any form of assurance on the projected financial information or their achievability and assume no responsibility for, and disclaim any association with, the prospective financial information.

The Projections are subject to estimates and assumptions in many respects and, as a result, subject to interpretation. While presented with numerical specificity, the Projections are based upon a variety of estimates and assumptions that are inherently uncertain, though considered reasonable by Steel Connect’s management as of the date of their preparation. These estimates and assumptions may prove to be inaccurate for any number of reasons, including general economic conditions, competition and the risks discussed in this proxy statement under the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 66. See also “Where You Can Find More Information” beginning on page 128. The Projections also reflect assumptions as to certain business decisions that are subject to change. Because the Projections were developed for the Company on a stand-alone basis without giving effect to the Merger, they do not reflect any synergies that may be realized as a result of the Merger or any changes to the Company’s operations or strategy that may be implemented after completion of the Merger. There can be no assurance that the prospective results will

be realized or that actual results will not be significantly higher or lower than estimated. Since the unaudited prospective financial information covers multiple years, that information by its nature becomes less predictive each successive year.

The Projections contain certain non-GAAP financial measures that Steel Connect believes are helpful in understanding its past financial performance and future results. Steel Connect management regularly uses a variety of financial measures that are not prepared in accordance with GAAP, including Adjusted EBITDA (defined as net income (loss) from continuing operations excluding net charges related to interest income, interest expense, income tax expense, depreciation, amortization of intangible assets, strategic consulting and other related professional fees, executive severance and employee retention, restructuring and restructuring-related expenses, (gain) loss on sale of long-lived assets, impairment of long-lived assets, impairment of goodwill, unrealized foreign exchange (gains) losses, net, other non-cash (gains) losses, net and other non-recurring and one-time items) and Adjusted EBIT (defined as earnings before the deduction of interest expenses and taxes, as adjusted for interest income, interest expense, income tax expense, strategic consulting and other related professional fees, executive severance and employee retention, restructuring and restructuring-related expenses, (gain) loss on sale of long-lived assets, impairment of long-lived assets, impairment of goodwill, unrealized foreign exchange (gains) losses, net, other non-cash (gains) losses, net and other non-recurring and one-time items) for forecasting, budgeting and measuring operating performance. The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures.

The Company believes that providing these non-GAAP measurements is useful, as these measures provide important supplemental information of our performance and permit management to evaluate the operating performance of our business. The Company uses Adjusted EBITDA and Adjusted EBIT in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to the Board, determining a component of certain incentive compensation for executive officers and other key employees based on operating performance, determining compliance with certain covenants in the Company’s credit facility, and evaluating short-term and long-term operating trends in our core business segments.

The Company believes that these non-GAAP financial measures assist in providing an enhanced understanding of our underlying operational measures to manage our core businesses, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. Further, the Company believes that these non-GAAP financial adjustments are useful because they allow evaluation of the effectiveness of the methodology and information used by the Company’s management in our financial and operational decision-making. These non-GAAP financial measures should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.

Some of the limitations of Adjusted EBITDA and Adjusted EBIT include:

•        Adjusted EBITDA and Adjusted EBIT do not reflect changes in, or cash requirements for, our working capital needs;

•        Adjusted EBITDA and Adjusted EBIT do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

•        Adjusted EBITDA and Adjusted EBIT do not reflect our tax expense or the cash requirements to pay our taxes;

•        Adjusted EBITDA and Adjusted EBIT do not reflect historical capital expenditures or future requirements for capital expenditures or contractual commitments;

•        although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted EBIT do not reflect any cash requirements for such replacements; and

•        other companies in our industry may calculate Adjusted EBITDA and Adjusted EBIT differently, limiting their usefulness as comparative measures.

The non-GAAP financial measures used in the Projections were relied upon by Houlihan Lokey for purposes of its financial analyses and opinion and by the Special Committee in connection with its consideration of the Merger. Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and, therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure.

None of Steel Connect or any of its affiliates, advisors, officers, directors or other representatives can provide any assurance that actual results will not differ from the Projections, and none of them undertakes any obligation to update, or otherwise revise or reconcile, the Projections to reflect circumstances existing after the date the Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Projections, as applicable, are shown to be in error. Except as required by applicable securities laws, Steel Connect does not intend to make publicly available any update or other revision to the Projections, even in the event that any or all assumptions are shown to be in error. Steel Connect has made publicly available its actual results of operations for the year ended July 31, 2021 in its 2021 Annual Report, for the quarterly period ended October 31, 2021 on Steel Connect’s Quarterly Report on Form 10-Q filed with the SEC on December 13, 2021, for the quarterly period ended January 31, 2022 on Steel Connect’s Quarterly Report on Form 10-Q filed with the SEC on March 17, 2022 and for the quarterly period ended April 30, 2022 on Steel Connect’s Quarterly Report on Form 10-Q filed with the SEC on June 14, 2022. None of Steel Connect or its affiliates, advisors, officers, directors or other representatives has made or makes any representation to any Steel Connect stockholder or other person regarding the ultimate performance of Steel Connect or its subsidiaries compared to the information contained in the Projections or that forecast results will be achieved. Steel Connect has made no representation to the Parent Parties, in the Merger Agreement or otherwise, concerning the Projections.

The Projections do not take into account any circumstances or events occurring after the date they were prepared.

The following presents the components of the Projections in summary form:

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(1)      Value-Added Revenue is defined as Revenue less Cost of Materials (which cost consists of direct material cost and freight cost).

(2)      The assumptions used to develop the projections for 2023E through 2025E are as follows:

a.       Annual Revenue growth projections were based on the estimates for the continuing base business and new business development at the time these projections were developed.

b.       Annual VAR as a percentage of Revenue of approximately 51.4%, which was consistent with the forecast trends at the time these projections were developed.

c.       Annual Gross Profit as a percentage of VAR of approximately 40.0%, which was consistent with the forecast trends at the time these projections were developed.

d.       Annual operating expenses of approximately $35.4 million, which was consistent with the forecast trends at the time these projections were developed. Any increases in operating expenses were expected to be offset by strategic cost savings initiatives.

e.       Annual Depreciation and Amortization expense of approximately $3.5 million, which was consistent with the forecast trends at the time these projections were developed.

____________

(1)      Management Salary and Wages reflects salaries of Parent employees based on an allocation of time for functions performed for the benefit of the Company.

(2)      Other Professional Fees includes legal fees, auditor fees, investor relations fees and stock market fees, among other professional fees.

(3)      Taxes and Other Expenses includes tax preparation fees.

____________

(1)      Global Intangible Low-Taxed Income (“GILTI”) is defined as the income earned by foreign affiliates of U.S. companies from intangible assets such as patents, trademarks and copyrights.

(2)      U.S. portion only.

Utilization of NOLs

The Company’s past operations generated significant NOLs. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act was enacted in response to the COVID-19 pandemic which among, other things, amended the treatment of NOLs. Under federal tax laws for NOLs arising in tax years beginning before January 1, 2018, we generally can use any such NOLs and certain related tax credits to reduce ordinary income tax paid in our prior two

tax years or on our future taxable income for up to 20 years, at which point they “expire” for such purposes. Until they expire, we can “carry forward” NOLs and certain related tax credits that we do not use in any particular year to offset taxable income in future years. For NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021, we are allowed to carryback such NOLs to each of the five taxable years preceding the taxable year of such losses and generally can use any such NOLs and certain related tax credits to reduce ordinary income tax paid on our future taxable income indefinitely; however, except for NOLs generated in tax years beginning after December 31, 2017 and prior to January 1, 2021 (which can be carried back to reduce taxable income for the prior five tax years), any such NOLs cannot be used to reduce ordinary income tax paid in prior tax years. In addition, the deduction for NOLs arising in tax years beginning after December 31, 2020 is limited to 80 percent of our taxable income for any tax year (computed without regard to the NOL deduction). The Company had net NOL carryforwards for federal and state tax purposes of approximately $2.1 billion and $111.0 million, respectively, at July 31, 2021, substantially all of which arose in tax years ending before January 1, 2018. We cannot estimate the exact amount of NOLs that we will be able use to reduce future income tax liability because we cannot predict the amount and timing of our future taxable income.

Financing

Steel Connect and the Parent Parties estimate that the total amount of funds required to complete the Merger and related transactions and pay related fees and expenses will be approximately $63.3 million. The Merger is not subject to any financing condition and the Parent Parties intend to fund this amount from cash on hand.

Interests of Steel Connect’s Directors and Executive Officers in the Merger

Steel Connect’s directors and executive officers will receive the same Per Share Merger Consideration in respect of their shares of Common Stock. However, in considering the recommendation of the Board that you vote to adopt the Merger Agreement, you should be aware that aside from their interests as stockholders of Steel Connect, Steel Connect’s directors and executive officers have interests in the Merger that may be different from, or in addition to, those of other stockholders of Steel Connect generally. Interests of executive officers and directors that may be different from or in addition to the interests of Steel Connect’s stockholders include:

•        Steel Connect’s executive officers as of the Effective Time will become the initial executive officers of the surviving corporation.

•        Steel Connect’s directors and executive officers are entitled to continued indemnification and insurance coverage under the Merger Agreement, and Steel Connect’s directors are entitled to continued indemnification and insurance coverage under indemnification agreements.

•        Members of the Special Committee are receiving compensation for their service on the Special Committee.

•        An aggregate of 479,562 Restricted Shares are held by Steel Connect’s directors and executive officers. At the Effective Time, each Restricted Share will immediately vested and all restrictions thereon will lapse in full as of immediately before the Effective Time, and each such Restricted Share will be cancelled and converted into the right to receive the Per Share Merger Consideration.

In addition, Messrs. Lichtenstein and Howard are directors or officers of Parent and may be deemed to beneficially own approximately 50.3% and 20.7%, respectively, of the outstanding limited partnership units of Parent, including direct and indirect holdings of such units, as of June 30, 2022. As a result, Messrs. Lichtenstein and Howard will each hold an indirect interest in Steel Connect following the Merger through their ownership interests in Parent.

The members of the Special Committee were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in making it recommendations to the Board, which was also aware of and took into account these interests, among other matters, when making its recommendation to the stockholders of Steel Connect that the Merger Agreement be adopted. See “Special Factors — Background of the Merger” beginning on page 17 and “Special Factors — Reasons for the Merger; Recommendation of the Special Committee; Recommendation of the Board; Fairness of the Merger” beginning on page 27.

Effective upon the consummation of the Merger, Steel Connect will be wholly owned by Parent.

Steel Connect’s stockholders should take these interests into account in deciding whether to vote “FOR” the adoption of the Merger Agreement. These interests are described in more detail below, and certain of them are quantified in the narrative below.

Treatment of Steel Connect Equity Awards in the Merger

On July 23, 2020, the Company’s stockholders approved the 2020 Stock Incentive Compensation Plan (“2020 Incentive Plan”). The 2020 Incentive Plan replaced the 2010 Incentive Award Plan, as amended (the “2010 Incentive Plan”). The Company also has a 2005 Non-Employee Director Plan (the “2005 Director Plan”). As of July 23, 2020, no additional grants may be issued under the 2010 Incentive Plan. Any awards that are outstanding under the 2010 Incentive Plan continue to be subject to the terms and conditions of the 2010 Incentive Plan. Under the 2020 Incentive Plan, the Company may grant up to 4,945,000 shares of Common Stock of the Company in addition to (i) 3,668,143 shares of Common Stock previously available for issuance under the 2010 Incentive Plan and (ii) up to 1,060,523 shares of Common Stock subject to outstanding awards under the 2010 Incentive Plan, which if forfeited or lapse unexercised or are settled in cash and are not issued under the prior plan for any reason, may be issued under the 2020 Incentive Plan. As of July 31, 2021, 8,442,623 shares of Common Stock were available for future issuance under the 2020 Incentive Plan. As of the filing of this proxy statement, there are 479,562 outstanding awards under the 2020 Incentive Plan. The 2020 Plan is incorporated as Exhibit 10.36 to the 2021 Annual Report.

The Board administers all stock plans, approves the individuals to whom options will be granted, and determines the number of shares of Common Stock and exercise price of each option and may delegate this authority to a committee of the Board or to certain officers of the Company in accordance with SEC regulations and applicable Delaware law.

At the Effective Time, each Restricted Share issued by the Company pursuant to, or otherwise governed by, any Company equity investment plan that is outstanding immediately before the Effective Time, shall be vested and all restrictions thereon shall lapse in full as of immediately before the Effective Time, and each such Restricted Share shall be cancelled and converted into the right to receive the Per Share Merger Consideration.

Employment Agreements

We do not have agreements with any of our executive officers that guarantee employment for a set term and, accordingly, all of the executive officers are employees at will, with the exception of an employment agreement with John Ashe, Former Chief Executive Officer of IWCO Direct Holdings, Inc., a former subsidiary of the Company (“IWCO”), and a severance agreement with Joseph B. Sherk, Former Senior Vice President and Chief Accounting Officer of the Company. For further details of these employment arrangements, see “Executive Compensation — Employment Arrangements of Named Executive Officers” on page 120. See also “Important Additional Information Regarding Steel Connect — Company Background — Disposition of IWCO” on page 112.

Continued Employment

Steel Connect’s executive officers are also executive officers of Parent and are expected to continue in their roles following the Effective Time.

Voting by the Company’s Directors and Executive Officers

As of the filing of this proxy statement, (i) Mr. Warren G. Lichtenstein held 1,655,599 shares of Common Stock including his beneficial ownership of 60,000 shares that, collectively, pursuant to the Merger, will be converted into the right to receive $2,235,059 as cash merger consideration, collectively representing approximately 2.7% of the outstanding shares of Common Stock; (ii) Mr. Jack L. Howard held 872,528 shares of Common Stock that, pursuant to the Merger, will be converted into the right to receive $1,177,913 as Per Cash Merger Consideration, representing approximately 1.4% of the outstanding shares of Common Stock; (iii) Mr. Glen Kassan held 425,650 shares of Common Stock that, pursuant to the Merger, will be converted into the right to receive $574,628 as Per Cash Merger Consideration, representing less than 1% of the outstanding shares of Common Stock; (iv) Ms. Maria U. Molland held 189,134 shares of Common Stock that, pursuant to the Merger, will be converted into the right to receive $255,331 as Per Cash Merger Consideration, representing less than 1% of the outstanding shares of Common Stock; (v) Mr. Jeffrey J. Fenton held 471,406 shares of Common Stock that, pursuant to the Merger, will be converted into the right to receive $636,398 as Per Cash Merger Consideration, representing less than 1% of the outstanding shares of Common Stock; (vi) Mr. Jeffrey S. Wald held 443,895 shares of Common Stock that, pursuant to the Merger, will be converted into the right to receive $599,258 as Per Cash Merger Consideration; and (vii) Ms. Renata Simril held 155,308 shares of Common Stock that, pursuant to the Merger, will be converted into the right to receive $209,666 as Per Cash Merger Consideration, representing less than 1%

of the outstanding shares of Common Stock. As of the filing of this proxy statement, Messrs. Lichtenstein, Howard, Kassan, Fenton and Wald and Msses. Molland and Simril are the only directors or current executive officers of the Company that beneficially owned Common Stock. Pursuant to the Support Agreement, Mr. Lichtenstein and Mr. Howard have agreed to vote (or cause to be voted) all the shares of Common Stock and Series C Preferred Stock that each beneficially owns in favor of the adoption and approval of the Merger Agreement, and the Transactions, including the Merger. See “Important Additional Information Regarding Steel Connect — Support Agreement.”

A copy of the Support Agreement is included as Annex C to this proxy statement.

Golden Parachute Compensation

SEC rules require us to disclose and conduct an advisory vote on the compensation that would be payable to our Named Executive Officers based on, or that otherwise relates, to the Merger Agreement. Consummation of the Merger, however, will not trigger any such payments. Accordingly, there are no payments to approve in connection with the Merger Agreement and we are not asking our stockholders to conduct such vote.

Indemnification/Insurance

Steel Connect’s bylaws provide for mandatory indemnification of directors and executive officers against certain liabilities that may arise by reason of their status or service as directors or officers. In addition, pursuant to the Merger Agreement, Steel Connect’s directors and executive officers will be entitled to certain ongoing indemnification from Parent and the surviving corporation and coverage under directors’ and officers’ liability insurance policies. The indemnification and insurance provisions in the Merger Agreement are further described in the section entitled “The Merger Agreement — Other Covenants and Agreements — Indemnification; Directors’ and Officers’ Insurance” on page 88. Additionally, each of the directors of the Company is party to an indemnification agreement, providing for certain ongoing indemnification from Parent and the surviving corporation and coverage under directors’ and officers’ liability insurance policies on terms substantially similar to those provided in the Merger Agreement. The form of the indemnification agreement is filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended October 31, 2021.

Compensation of the Special Committee

The Special Committee consists of two independent members of the Board: Ms. Maria Molland and Ms. Renata Simril. In consideration of the time and effort required of the members of the Special Committee in connection with evaluating the potential merger or any related transaction, each member of the Special Committee is entitled to receive a flat fee of $50,000 in cash, one-half of which has been paid in connection with services rendered to the Company as of the date hereof and one-half of which will be paid upon the dissolution of the Special Committee.

These fees are not dependent on the closing of the Merger or on the Special Committee’s or the Board’s approval of, or recommendations with respect to, the Merger or any other transaction.

Material U.S. Federal Income Tax Consequences of the Merger

The following discussion is a summary of the material U.S. federal income tax consequences of the Merger to U.S. Holders and Non-U.S. Holders (each as defined below) of our Common Stock whose shares are converted into the right to receive cash pursuant to the Merger, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), the U.S. Treasury Regulations promulgated thereunder (the “Treasury Regulations”), judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof.

These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder or Non-U.S. Holder. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the Merger.

This discussion is limited to holders who hold our Common Stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment income or taxes under the Foreign Account Tax Compliance Act. In addition, it does not address consequences relevant to holders subject to special rules, including, without limitation:

•        tax-exempt organizations or governmental organizations;

•        persons subject to the alternative minimum tax;

•        S-corporations, partnerships or any other entities or arrangements treated as partnerships or pass-through entities for U.S. federal income tax purposes (and investors therein);

•        banks, insurance companies and other financial institutions;

•        brokers or dealers in securities;

•        traders in securities who elect to apply a mark-to-market method of accounting;

•        regulated investment companies or real estate investment trusts;

•        U.S. expatriates and former citizens or long-term residents of the United States;

•        persons holding our Common Stock as part of a hedge, straddle or other risk reduction transaction or as part of a conversion transaction or other integrated investment;

•        persons deemed to sell our Common Stock under the constructive sale provisions of the Code;

•        persons who received our Common Stock in a compensatory transaction or pursuant to the exercise of options or warrants or pursuant to restricted stock units (or other compensation arrangements);

•        U.S. Holders whose “functional currency” is not the U.S. dollar;

•        “controlled foreign corporations,” “passive foreign investment companies” or corporations that accumulate earnings to avoid U.S. federal income tax;

•        tax-qualified retirement plans;

•        persons that directly, indirectly or constructively own five percent or more (by vote or value) of our Common Stock; and

•        persons who do not vote in favor of the Merger and who properly demand appraisal of their shares under Delaware law.

If a partnership (including an entity or arrangement, domestic or foreign, treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Common Stock, the tax treatment of a partner in such partnership will generally depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. Partnerships holding our Common Stock and partners therein are encouraged to consult their tax advisors regarding the U.S. federal income tax consequences of the Merger.

This discussion also does not address the Parent Parties or any of their affiliates.

THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. HOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER OTHER U.S. FEDERAL TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION.

U.S. Holders

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Common Stock that, for U.S. federal income tax purposes, is or is treated as any of the following:

•        an individual who is a citizen or resident of the United States;

•        a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof or the District of Columbia;

•        an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

•        a trust (1) if a court within the United States is able to exercise primary jurisdiction over the trust’s administration and one or more United States persons (as defined in Section 7701(a)(30) of the Code) are authorized to control all substantial decisions of the trust; or (2) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.

The receipt of merger consideration by a U.S. Holder in exchange for our Common Stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, if the transaction is treated as “closed” rather than an “open transaction” for U.S. federal income tax purposes (as described under “Tax Treatment of the ModusLink CVRs”), then, for U.S. federal income tax purposes, a U.S. Holder who receives merger consideration pursuant to the Merger would recognize gain or loss equal to the difference, if any, between (i) the sum of the amount of cash received and the fair market value of the ModusLink CVRs received, as determined for U.S. federal income tax purposes, and (ii) the U.S. Holder’s adjusted tax basis in the shares of Common Stock surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares of Common Stock. Such gain or loss will be a capital gain or loss, and will be a long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the consummation of the Merger. A preferential tax rate generally will apply to long-term capital gains recognized by certain non-corporate U.S. Holders. The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of Common Stock at different times or different prices, such U.S. Holder must determine its tax basis, holding period and gain or loss separately with respect to each block of Common Stock.

Tax Treatment of the ModusLink CVRs

Receipt of the CVRs and Payments Thereunder

There is substantial uncertainty as to the tax treatment of the ModusLink CVRs. The receipt of the ModusLink CVRs as part of the merger consideration may be treated as a “closed transaction” or an “open transaction” for U.S. federal income tax purposes, which affects the amount of gain, if any, that may be recognized at the time of the consummation of the Merger. There is no legal authority directly on point addressing whether contingent value rights with characteristics similar to the ModusLink CVRs should be taxed as an “open transaction” or “closed transaction,” and such question is inherently factual in nature.

It is possible that either Parent or Steel Connect may be required to take a position for income tax, withholding, and/or information reporting purposes that the Merger, including the receipt of the ModusLink CVRs as part of the merger consideration, is either a “closed transaction” or an “open transaction.” Each holder of our Common Stock is urged to consult its tax advisor regarding the impact, if any, of the position that may be taken by Parent or Steel Connect on such holder’s characterization of the merger consideration.

The following sections discuss the possible consequences if the receipt of the merger consideration is treated as an “open transaction” or a “closed transaction” for U.S. federal income tax purposes. Holders are urged to consult their tax advisors with respect to the proper characterization of the receipt of the ModusLink CVRs.

Closed Transaction Treatment

If the value of the ModusLink CVRs can be “reasonably ascertained,” the Merger should be treated as a “closed transaction” for U.S. federal income tax purposes and a U.S. Holder would recognize gain or loss upon consummation of the Merger taking into account the fair market value of the ModusLink CVRs, determined on the date of the consummation of the Merger. If the Merger is a “closed transaction” for U.S. federal income tax purposes, a U.S. Holder’s initial tax basis in the ModusLink CVRs will equal the fair market value of the ModusLink CVRs on the date of the consummation of the Merger. The holding period of the ModusLink CVRs will begin on the day following the date of the consummation of the Merger.

If the Merger is a “closed transaction” for U.S. federal income tax purposes, there is no legal authority directly addressing the U.S. federal income tax treatment of payments that may be received pursuant to the ModusLink CVRs. Accordingly, the amount, timing, and character of any gains, income or loss with respect to the ModusLink CVRs are uncertain. For example, payments received with respect to a ModusLink CVR may be treated, in whole or in part, as a non-taxable return of a ModusLink CVR holder’s adjusted tax basis in the ModusLink CVR.

To the extent that payments received by a U.S. Holder are not treated as a return of basis or exceed such basis, they could be treated as (1) capital gain (long-term capital gain if the U.S. Holder has held the ModusLink CVR for more than one year), (2) income taxable at ordinary rates, or (3) dividends.

In the event a payment gives rise to capital gain, a portion of any payment due more than six months following the consummation of the Merger, as the case may be, with respect to a ModusLink CVR may constitute imputed interest taxable as ordinary income under Section 483 of the Code, which is subject to withholding with respect to any Non-U.S. Holders. There is no legal authority directly addressing the U.S. federal income tax treatment of the expiration of any rights to receive a cash payment with respect to the ModusLink CVRs. Accordingly, a ModusLink CVR holder may not be able to recognize a loss with respect to the expiration of a right to receive a payment under the ModusLink CVR until the holder’s right to receive all ModusLink CVR payments terminates.

It is possible, although neither Parent nor Steel Connect expects it to be the case, that the ModusLink CVRs could be treated as one or more “debt instruments.” If that is the case, then payments received with respect to the ModusLink CVRs generally will be treated as payments in retirement of a “debt instrument,” except to the extent interest is imputed under the rules of Sections 1274 and 1275 of the Code. If those rules were to apply, interest generally would be imputed under complex rules at a rate that corresponds to Parent’s borrowing rate for similar instruments. A U.S. Holder will include the interest into income on an annual basis, whether or not currently paid.

Open Transaction Treatment

The receipt of the ModusLink CVRs would generally be treated as part of an “open transaction” if the value of the ModusLink CVRs cannot be “reasonably ascertained.” If the receipt of ModusLink CVRs were treated as an “open transaction” for U.S. federal income tax purposes, a U.S. Holder would not immediately take the ModusLink CVRs into account in determining its capital gain (or loss, if allowed and applicable) on the receipt of ModusLink CVRs upon consummation of the Merger and a U.S. Holder would take no tax basis in the ModusLink CVRs. Rather, subject to the imputed interest rules under Section 483 of the Code as discussed below, the U.S. Holder would recognize gain as payments with respect to the ModusLink CVRs are received or deemed received in accordance with the U.S. Holder’s regular method of accounting, but only to the extent the sum of such payments (and all previous payments under the ModusLink CVRs), together with the amount of cash received upon consummation of the Merger, exceeds such U.S. Holder’s adjusted tax basis in the shares of Common Stock surrendered pursuant to the Merger. And a U.S. Holder who does not receive cumulative consideration having a fair market value at least equal to such U.S. Holder’s adjusted tax basis in the shares of Common Stock surrendered pursuant to the Merger will recognize a capital loss in the year that the U.S. Holder’s right to receive further payments under the ModusLink CVRs terminates. The deductibility of any such capital losses may also be subject to applicable limitations.

If the transaction is treated as an “open transaction” for U.S. federal income tax purposes, a portion of any payment due more than six months following the consummation of the Merger, as the case may be, with respect to a ModusLink CVR may constitute imputed interest taxable as ordinary income under Section 483 of the Code. The portion of any ModusLink CVR payment treated as imputed interest under Section 483 of the Code generally would equal the excess of the amount of the ModusLink CVR payment over the present value of such amount as of the closing date calculated using the applicable federal rate as the discount rate. A U.S. Holder of a ModusLink CVR must include in its taxable income interest imputed pursuant to Section 483 of the Code using such holder’s regular method of accounting.

Due to the legal and factual uncertainties regarding the tax treatment of the ModusLink CVRs, U.S. Holders are urged to consult their own tax advisors to determine the timing and characterization of income, gain or loss resulting from the receipt of payments pursuant to, and expiration of, the ModusLink CVRs.

Non-U.S. Holders

For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of our Common Stock that is neither a U.S. Holder nor an entity that is treated as a partnership for U.S. federal income tax purposes. Subject to the discussion below in “— Information Reporting and Backup Withholding,” any gain realized by a Non-U.S. Holder resulting from the Merger generally will not be subject to U.S. federal income or withholding tax unless:

•        the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States);

•        the Non-U.S. Holder is an individual present in the United States for 183 days or more during the taxable year of the Merger, and certain other requirements are met; or

•        the Non-U.S. Holder’s Common Stock constitutes a “United States real property interest” as defined in the Code (a “USRPI”).

Unless an applicable treaty provides otherwise, gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular graduated rates applicable to U.S. persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.

Gain described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may be offset by certain U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet above, the Non-U.S. Holder’s Common Stock will not be treated as a USRPI unless we are or have been a “United States real property holding corporation,” as defined in the Code (a “USRPHC”), at any time during the five-year period ending on the date of the Merger or the Non-U.S. Holder’s holding period of our Common Stock, whichever period is shorter. We have not made a determination as to whether we are a USRPHC at any time during the five-year period ending on the date of the Merger. Generally, a corporation is a USRPHC if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide property interests plus certain other assets used or held for use in a trade or business. Even if we were treated as a USRPHC at any time during the applicable period, the Non-U.S. Holder’s Common Stock will not be treated as a USRPI unless (1) the shares of Common Stock exchanged in the Merger was not regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code) prior to the Merger, or (2) such holder owned, actually or constructively, more than five percent of the shares of Common Stock during the applicable period described above. If a Non-U.S. Holder’s Common Stock constitutes a USRPI, such Non-U.S. Holder will be subject to U.S. federal income tax on the gain recognized in the Merger on a net basis in the same manner as a U.S. Holder, except that the branch profits tax will not apply.

Non-U.S. Holders are encouraged to consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

Information Reporting and Backup Withholding

Information reporting and backup withholding may apply to the merger consideration received by a holder pursuant to the Merger. Backup withholding generally will not apply to (1) a U.S. Holder who furnishes a correct taxpayer identification number and certifies that such holder is not subject to backup withholding on IRS Form W-9, or otherwise establishes a basis for exemption from backup withholding, or (2) a Non-U.S. Holder who provides a certification of such holder’s non-U.S. status on the applicable IRS Form W-8, or otherwise establishes a basis for exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. Copies of information returns that are filed with the IRS may be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which a Non-U.S. Holder resides or is established.

Regulatory Approvals

No material federal or state regulatory approvals, filings or notices are required in connection with the Merger other than the filing of this proxy statement and the Schedule 13E-3 and the filing of a certificate of merger with the Secretary of State of the State of Delaware by the Company and Merger Sub.

Delisting and Deregistration of Common Stock

If the Merger is completed, our shares of Common Stock will be delisted from Nasdaq and deregistered under the Exchange Act. As a result, we would no longer file periodic reports with the SEC on account of the shares of Common Stock.

Fees and Expenses

Except as described under “The Merger Agreement — Expense Reimbursement Provisions,” if the Merger is not completed, all fees and expenses incurred in connection with the Merger will be paid by the party incurring those fees and expenses.

Total fees and expenses incurred or to be incurred by Steel Connect in connection with the Merger are estimated at this time to be as follows:

Anticipated Accounting Treatment of the Merger

The Merger will be accounted for in accordance with GAAP. Parent is determining whether the purchase method of accounting or historical book values will be used to account for the transaction.

Rights of Appraisal

If the Merger is consummated and certain conditions set forth in Section 262 of the DGCL are met, Steel Connect stockholders who do not vote in favor of the adoption of the Merger Agreement, who properly demand an appraisal of their shares of Common Stock, who continuously hold such shares of Common Stock from the date of demand through the Effective Time of the Merger and who otherwise comply with the procedures of Section 262 of the DGCL will be entitled to appraisal rights in connection with the Merger under Section 262 of the DGCL (“Section 262”). Unless the context requires otherwise, all references in Section 262 and in this summary to a “stockholder” are to a record holder of shares of Common Stock.

The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex E and incorporated into this proxy statement by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that Steel Connect stockholders exercise their appraisal rights under Section 262. Only a holder of record of shares of Common Stock is entitled to demand appraisal rights for the shares of Common Stock registered in that holder’s name. A person having a beneficial interest in shares of Common Stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to demand an appraisal of such holder’s shares. If you hold your shares of Common Stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee to ensure that appraisal rights are exercised.

Under Section 262, holders of record of shares of Common Stock who (1) deliver a written demand for appraisal of such stockholder’s shares of Common Stock to Steel Connect prior to the vote on the adoption of the Merger Agreement; (2) do not vote in favor of the adoption of the Merger Agreement; (3) continuously are the record holders of such shares of Common Stock from the date of demand through the Effective Time; and (4) otherwise comply with the procedures set forth in Section 262, may be entitled to have their shares of Common Stock appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares of Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid on the amount determined to be fair value as determined by the Delaware Court of Chancery. However, the Delaware Court of Chancery will dismiss appraisal proceedings as to all Steel Connect stockholders who assert appraisal rights unless (a) the total number of shares of Common Stock entitled to appraisal exceeds 1% of the outstanding shares of Common Stock eligible for appraisal; or (b) the value of the aggregate Per Share Merger Consideration in respect of such shares exceeds $1 million (conditions (a) and (b) referred to as the “ownership thresholds”). Unless the Delaware Court of

Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the Effective Time through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period. However, at any time before the Delaware Court of Chancery enters judgment in the appraisal proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case such interest will accrue after the time of such payment only on the sum of (1) the difference, if any, between the amount paid and the “fair value” determined by the Court of Chancery and (2) any interest accrued prior to the time of such voluntary payment, unless paid at such time. The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the stockholder meeting, must notify each of its stockholders of record as of the record date for notice of such meeting that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement constitutes Steel Connect’s notice to stockholders that appraisal rights are available in connection with the Merger, and the full text of Section 262 is attached to this proxy statement as Annex E. In connection with the Merger, any holder of shares of Common Stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Annex E carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner will result in the loss of appraisal rights under the DGCL. A stockholder who loses his, her or its appraisal rights will be entitled to receive the Per Share Merger Consideration without interest. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of Common Stock, Steel Connect believes that if a stockholder considers exercising such rights, that stockholder should seek the advice of legal counsel.

Stockholders wishing to exercise the right to seek an appraisal of their shares of Common Stock must do ALL of the following:

•        the stockholder must not vote in favor of the proposal to adopt the Merger Agreement;

•        the stockholder must deliver to Steel Connect a written demand for appraisal before the vote on the Merger Agreement at the Annual Meeting; and

•        the stockholder must continuously hold the shares of Common Stock from the date of making the demand through the Effective Time (a stockholder will lose appraisal rights if the stockholder transfers the shares of Common Stock before the Effective Time).

In addition, one of the ownership thresholds must be met. Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the Merger Agreement, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the Merger Agreement, abstain or not vote his, her or its shares of Common Stock.

Filing Written Demand

A stockholder wishing to exercise appraisal rights must deliver to Steel Connect, before the vote on the adoption of the Merger Agreement at the Annual Meeting at which the proposal to adopt the Merger Agreement will be submitted to the stockholders, a written demand for the appraisal of such stockholder’s shares of Common Stock, and that stockholder must not vote, in person (virtually) or by proxy, in favor of the adoption of the Merger Agreement. A stockholder exercising appraisal rights must hold of record the shares of Common Stock on the date the written demand for appraisal is made and must continue to hold the shares of Common Stock of record through the Effective Time. Neither voting (in person (virtually) or by proxy) against the adoption of the Merger Agreement nor abstaining from voting or failing to vote on the proposal to adopt the Merger Agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the Merger Agreement. A stockholder’s failure to make the written demand prior to the taking of the vote on the adoption of the Merger Agreement at the Company Stockholder Meeting will constitute a waiver of appraisal rights.

Only a holder of record of shares of Common Stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A demand for appraisal in respect of shares of Common Stock should be executed by or on behalf of the holder of record, and must reasonably inform Steel Connect of the identity of the holder and state that the stockholder intends thereby to demand an appraisal of such stockholder’s shares of Common Stock.

If the shares of Common Stock are owned of record in the name of another person, such as a broker, fiduciary, depositary or other nominee, such demand must be executed by or on behalf of the record owner, and if such shares of Common Stock are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand must be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners. If a stockholder holds shares of Common Stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record holder.

STOCKHOLDERS WHO HOLD THEIR SHARES OF COMMON STOCK IN BROKERAGE OR BANK ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER OR OTHER NOMINEES, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES OF COMMON STOCK. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES OF COMMON STOCK HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

Steel Connect, Inc.
2000 Midway Lane
Smyrna, Tennessee 37167

Any holder of shares of Common Stock who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her or its demand for appraisal and accept the consideration offered pursuant to the Merger Agreement by delivering to Steel Connect a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the Effective Time will require written approval of the surviving corporation. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the Per Share Merger Consideration within 60 days after the Effective Time.

Notice by the Surviving Corporation

If the Merger is completed, within 10 days after the Effective Time, the surviving corporation will notify each record holder of shares of Common Stock who has made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the Merger Agreement, that the Merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within 120 days after the Effective Time, but not thereafter, the surviving corporation or any holder of shares of Common Stock who has complied with Section 262 and is entitled to appraisal rights under Section 262 (or a beneficial owner in the circumstances described in the next paragraph) may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares held by all stockholders entitled to appraisal. The surviving corporation is under no obligation, and has no present intention, to file a petition, and holders should not assume that the surviving corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of Common Stock. Accordingly, any holders of shares of Common Stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of Common Stock within the time and in the manner prescribed in Section 262. If no petition for

appraisal is filed with the Delaware Court of Chancery within 120 days after the Effective Time, stockholders’ rights to appraisal shall cease, and all holders of shares of Common Stock will be entitled to receive the consideration offered pursuant to the Merger Agreement.

Within 120 days after the Effective Time, any holder of shares of Common Stock who has complied with the requirements for an appraisal of such holder’s shares pursuant to Section 262 will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares of Common Stock not voted in favor of the adoption of the Merger Agreement and with respect to which Steel Connect has received demands for appraisal, and the aggregate number of holders of such shares of Common Stock. The surviving corporation must give this statement to the requesting stockholder within 10 days after receipt of the written request for such a statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares of Common Stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition seeking appraisal or request from the surviving corporation the foregoing statements. As noted above, however, the demand for appraisal can only be made by a stockholder of record.

If a petition for an appraisal is duly filed by a holder of shares of Common Stock and a copy thereof is served upon the surviving corporation, the surviving corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded appraisal of their shares of Common Stock and with whom agreements as to the value of their shares have not been reached. After notice to the stockholders as required by the court, at the hearing on such petition, the Delaware Court of Chancery will determine the stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded appraisal for their shares of Common Stock to submit their stock certificates to the Delaware Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to such stockholder.

Determination of Fair Value

Where proceedings are not dismissed, the appraisal proceeding will be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of Common Stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the court in its discretion determines otherwise for good cause shown, interest from the Effective Time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment. However, the surviving corporation has the right, at any point prior to the Delaware Court of Chancery’s entry of judgment in the proceedings, to make a voluntary cash payment to each stockholder seeking appraisal. If the surviving corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262, interest will accrue thereafter only on the sum of (1) the difference, if any, between the amount paid by the surviving corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery and (2) interest accrued before such voluntary cash payment, unless paid at that time. In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v Technicolor, Inc., the Supreme Court of Delaware stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger v. UOP, Inc., the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement, and the documents incorporated by reference in this proxy statement, include “forward-looking statements” that reflect our current views, including, without limitation, views as to the expected completion and timing of the Merger and the potential payment of the ModusLink Payment Amount to holders of shares of Common Stock (other than the holders of Excluded Shares and Dissenting Shares) following the completion of the Merger. These statements can be identified by the fact that they do not relate strictly to historical or current facts. There are forward-looking statements throughout this proxy statement, including under the headings, among others, “Summary Term Sheet Relating to the Merger,” “Questions and Answers About the Annual Meeting and the Merger,” “The Annual Meeting,” “Special Factors,” and “Important Additional Information Regarding Steel Connect,” and in statements containing the words “aim,” “anticipate,” “are confident,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning, or the negative of these terms. You should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the actual results or developments we anticipate will be realized, or even if realized, that they will have the expected effects on the business or operations of Steel Connect. These forward-looking statements speak only as of the date on which the statements were made and we undertake no obligation to update or revise any forward-looking statements made in this proxy statement or elsewhere as a result of new information, future events or otherwise, except as required by law. In addition to other factors and matters referred to or incorporated by reference in this document, we believe the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

•        the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;

•        the outcome of any legal proceedings that may be instituted against Steel Connect or others relating to the Merger Agreement;

•        the risk that the pendency of the Merger disrupts current plans and operations and potential difficulties in employee retention;

•        the effect of the announcement of the Merger on our business relationships, operating results and business generally;

•        the amount of the costs, fees, expenses and charges related to the Merger;

•        the Merger Agreement’s contractual restrictions on the conduct of our business prior to completion of the Merger;

•        the possible adverse effect on our business and the price of Common Stock if the Merger is not completed in a timely matter or at all; and

•        other risks detailed in our filings with the SEC, including in the section entitled “Risk Factors” in the 2021 Annual Report.

See “Where You Can Find Additional Information” beginning on page 128 for the location of those SEC filings. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained in this proxy statement, readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date of this proxy statement. We cannot guarantee any future results, levels of activity, performance or achievements.

THE PARTIES TO THE MERGER

Steel Connect, Inc.

2000 Midway Lane
Smyrna, Tennessee 37167
United States of America
Telephone: (914) 461-1276

Steel Connect, Inc., a Delaware corporation, is a holding company which operates through its wholly owned subsidiary, ModusLink Corporation (“ModusLink”), which serves the supply chain management market.

ModusLink provides digital and physical supply chain solutions to many of the world’s leading brands across a diverse range of industries, including consumer electronics, telecommunications, computing and storage, software and content, consumer packaged goods, medical devices, retail and luxury and connected devices. These solutions are delivered through a combination of industry expertise, innovative service solutions, and integrated operations, proven business processes, an expansive global footprint and world-class technology. With a global footprint spanning North America, Europe and the Asia Pacific, the Company’s solutions and services are designed to improve end-to-end supply chains in order to drive growth, lower costs, and improve profitability.

Our executive offices are located at 2000 Midway Lane, Smyrna, Tennessee 37167, and our telephone number is (914) 461-1276.

Additional information about Steel Connect is contained in its public filings, which are incorporated by reference hereto. See “Incorporation of Certain Documents by Reference” beginning on page 127 and “Where You Can Find Additional Information” beginning on page 128.

Steel Partners Holdings L.P.

590 Madison Ave.
New York, New York 10022
Telephone: (212) 520-2300

Steel Partners Holdings L.P. is a Delaware limited partnership. Parent, together with its subsidiaries and affiliates, is a diversified global holding company that owns and operates businesses and has significant interests in leading companies in various industries, including diversified industrial products, energy, defense, supply chain management and logistics, banking and youth sports.

SP Merger Sub, Inc.

c/o Steel Partners Holdings L.P.
590 Madison Ave.
New York, New York 10022
Telephone: (212) 520-2300

SP Merger Sub, Inc. is a Delaware corporation formed by Parent solely for the purposes of effecting the Merger. Merger Sub is a wholly owned subsidiary of Parent. Merger Sub has not engaged in any business other than in connection with the Merger and the Transactions.

IMPORTANT INFORMATION REGARDING THE PARENT GROUP MEMBERS

The below table sets forth the names, jurisdiction of organization, principal business and the nature of each Parent Group Member’s affiliation.

The principal business address of each of the Parent Group Members is c/o Steel Partners Holdings L.P., 590 Madison Avenue, 32nd Floor, New York, New York 10022.

During the past five years, none of the persons or entities described above have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

The name, business address, present principal employment and citizenship of each director and executive officer of each Parent Group Member are set forth below. Unless otherwise noted, each director and officer has held their present principal employment for the past five years.

During the past five years, none of the directors or officers listed below have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

Executive Officers and Directors of Steel Partners Holdings GP, Inc.

Parent is managed by Steel Partners Holdings GP, Inc., its general partner. The following are the directors and executive officers of Steel Partners Holdings GP, Inc.