STEEL CONNECT, INC. : Entry into a Material Definitive Agreement, Unregistered Sale of Equity Securities, Material Modification to Rights of Security Holders, Amendments to Articles of Inc. or Bylaws; Change in Fiscal Year, Other Events, Financial Statements and Exhibits (form 8-K)

Item 1.01. Entry into a Material Definitive Agreement.

Transfer and Exchange Agreement

On April 30, 2023, Steel Connect, Inc. (the "Company") and Steel Partners Holdings L.P. ("Steel Partners"), Steel Excel, Inc. ("Steel Excel"), and WebFinancial Holding Corporation ("WebFinancial," and, together with Steel Excel, the "Exchanging Parties"), entered into a Transfer and Exchange Agreement (the "Exchange Agreement"). Pursuant to the Exchange Agreement, on May 1, 2023, the Exchanging Parties exchanged an aggregate of 3,597,744 shares of common stock, par value $0.10 per share, of Aerojet Rocketdyne Holdings, Inc. (the "Aerojet Shares") held by the Exchanging Parties for 3,500,000 shares of newly created Series E convertible preferred stock of the Company (the "Series E Preferred Stock," and such exchange and related transactions, the "Transaction").

Pursuant to the Exchange Agreement, the Company will call a stockholders' meeting (the "Company Stockholder Meeting") to consider and vote upon the rights of the Series E Preferred Stock to vote and receive dividends together with the Company Common Stock (as defined below) on an as-converted basis and the issuance of the Company Common Stock upon conversion of the Series E Preferred Stock by the holders at their option, pursuant to the rules and regulations of Nasdaq (the "Nasdaq Proposal") and any other matters which, following the closing of the Transaction, the Company's board of directors (the "Board") deems appropriate to consider and vote upon at the Company Stockholder Meeting. Upon approval by the Company's stockholders, the Series E Preferred Stock will be convertible into an aggregate of 184,891,318 shares of common stock, par value $0.01 per share, of the Company (the "Company Common Stock"), subject to adjustment as set forth in the Certificate of Designations (as defined below), and will vote together with the Company Common Stock and participate in any dividends paid on the Company Common Stock (except as described below), in each case, on an as-converted basis.

Warren G. Lichtenstein, the Executive Chairman of the Company, is also the Executive Chairman of the board of directors of Steel Partners. Jack L. Howard, a member of the Board, is also the President and a director of Steel Partners.

The description of the Exchange Agreement in this current report on Form 8-K does not purport to be complete and is subject, and qualified in its entirety by reference, to the full text of the Exchange Agreement, which is included as Exhibit 10.1 hereto and incorporated herein by reference.

Stockholders' Agreement

Concurrently with the execution of the Exchange Agreement, the Company, Steel Partners, Steel Excel, WebFinancial, WHX CS, LLC, WF Asset Corp., Steel Partners Ltd., Warren G. Lichtenstein and Jack L. Howard (together, the "SP Investors") entered into a Stockholders' Agreement dated as of April 30, 2023 (the "Stockholders' Agreement").

Pursuant to the Stockholders' Agreement, the parties agreed to the following relating to the governance of the Company:

(i) the Board shall consist of seven directors;

(ii) the Board shall maintain such committees as may be required by U.S. Securities and Exchange Commission (the "SEC") rules and regulations and the applicable rules and listing standards of the applicable stock exchange, including an audit committee consisting of at least three independent directors (the "Independent Audit Committee");

(iii) if the Company ceases to be an SEC reporting company prior to the date that any person or group of related persons owns 100% of equity securities of the Company (the "Final Sunset Date"), the Board shall have an audit committee comprised of at least three directors with at least one member that qualifies as an independent director under SEC and applicable exchange requirements and all remaining directors must not be affiliated with the reporting persons (the "Disinterested Audit Committee");

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(iv) the Company will create a transaction committee comprised of directors and senior management of the Company that will propose, consider and evaluate potential strategic transactions for the Company that increase stockholder value; and

(v) the charter and bylaws of the Company shall not be amended in any manner inconsistent with, or which would nullify or impair the terms of, the Stockholders' Agreement prior to the date specified in the Stockholders' Agreement without the prior approval of the Independent Audit Committee or Disinterested Audit Committee, as applicable.

The Stockholders' Agreement further provides that (A) prior to September 1, 2025, the prior approval of the Independent Audit Committee or the Disinterested Audit Committee, as applicable, is required for the following: (i) a voluntary . . .

Item 3.02 Unregistered Sales of Equity Securities.

The disclosure regarding the securities to be issued under the Exchange Agreement as set forth under Item 1.01 of this report is incorporated by reference under this Item 3.02.

The securities described above under Item 1.01 have not been registered under the Securities Act of 1933, as amended (the "Securities Act"). The Company relied on the exemption from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof.

Item 3.03 Material Modification to Rights of Security Holders.

The disclosure regarding the securities to be issued under the Exchange Agreement as set forth under Item 1.01 of this report is incorporated by reference under this Item 3.03.

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Item 5.03. Amendments to Articles of Incorporation or Bylaws.

The information set forth in Item 1.01 and Item 3.02 above relating to the issuance of the Series E Preferred Stock and the Certificate of Designations is incorporated herein by reference. The Certificate of Designations establishes the powers, designations, preferences, and other rights of the Series E Preferred Stock and became effective upon filing with the Secretary of State of the State of Delaware on May 1, 2023.

Item 8.01 Other Events.

On May 1, 2023, the Company and Steel Partners issued a joint press release announcing the entry into the Exchange Agreement. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits



Exhibit No.                             Exhibit Description

3.1             Certificate of Designations, Preferences and Rights of the Series E
              Convertible Preferred Stock of Steel Connect, Inc.
10.1            Transfer and Exchange Agreement, dated as of April 30, 2023, by and
              among Steel Partners Holdings L.P., Steel Excel, Inc., WebFinancial
              Holding Corporation and Steel Connect, Inc.
10.2            Stockholders' Agreement, dated as of April 30, 2023, by and among
              Steel Connect, Inc., Steel Partners Holdings L.P., and the other
              stockholders signatory therein.
10.3            Voting Agreement, dated as of April 30, 2023, by and among Steel
              Connect, Inc., Steel Partners Holding L.P., WebFinancial Holding
              Corporation, WHX CS, LLC, WF Asset Corp., Steel Partners, Ltd., Warren
              G. Lichtenstein, and Jack L. Howard.
99.1            Press Release, dated May 1, 2023.
104           Cover Page Interactive Data File (embedded within the Inline XBRL
              document).




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