IEC IEC Electronics Corp

The Board of Directors of the Company approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Offer and the Merger, and determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Offer and the Merger, are advisable, fair to, and in the best interests of the Company and its stockholders, and the Company intends to file a Solicitation/ Recommendation Statement on Schedule 14D-9 with the U.S. Securities and Exchange Commission (the “SEC”) recommending that holders of Common Stock tender their Shares into the Offer.

The Merger Agreement provides that the Company, on the one hand, or Parent and Purchaser, on the other hand, may specifically enforce the obligations of the other party under the Merger Agreement, subject to the terms of the Merger Agreement.

The Merger Agreement contains customary representations and warranties by each of Parent, Purchaser and the Company. These representations and warranties were made solely for the benefit of the parties to the Merger Agreement and (i) may not be treated as categorical statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove inaccurate rather than establishing matters as fact, (ii) may have been qualified in the Merger Agreement by disclosures that were made to the other party in the confidential disclosure schedules to the Merger Agreement, (iii) may apply contractual standards of “materiality” that are different from “materiality” under applicable securities laws, and (iv) were made only as of the date of the Merger Agreement or such other date as may be specified in the Merger Agreement. Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding the Company, its subsidiaries or other affiliates or their respective businesses. Investors are not third-party beneficiaries to the representations and warranties of the Company under the Merger Agreement and should not rely on such representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or other affiliates at the time they were made or otherwise. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company that is or will be contained in, or incorporated by reference into, the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents that the Company files with or furnishes to the SEC.

The Company has made customary covenants in the Merger Agreement, including, without limitation, covenants to conduct its business in all material respects in the ordinary course consistent with past practice, including not taking certain specified actions, prior to the consummation of the Merger. Parent and Purchaser also have made customary covenants in the Merger Agreement.

The Merger Agreement provides for a 35-day go shop period which expires September 16, 2021. During such period, the Company’s Board of Directors, together with the Company’s financial and legal advisors, may actively solicit, receive, evaluate and potentially enter into negotiations with parties that offer alternative proposals to acquire the Company. At the end of the go shop period, the Company will cease such activities, and will be subject to a customary “no shop” provision that restricts the Company’s ability to solicit acquisition proposals from third parties and to provide non-public information to and engage in discussions or negotiations with third parties regarding acquisition proposals after the go shop period; provided, however, that the Company may (i) continue to engage in negotiations, discussions and share due diligence information with Excluded Parties (as that term is defined in the Merger Agreement) for 15 days after the end of the go shop period and (ii) under certain circumstances and in compliance with certain obligations, provide non-public information and engage in discussions and negotiations with respect to an unsolicited acquisition proposal that constitutes or is reasonably expected to lead to a Superior Proposal, as that term is defined in the Merger Agreement.

The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company, in certain circumstances, to terminate the Merger Agreement and accept a Superior Proposal, as that term is defined in the Merger Agreement. The Company will be required to pay Parent a termination fee equal to $7,601,783, approximately 4.375% of the equity value of the Company implied by the Transaction, if, among other reasons, the Merger Agreement is terminated by Parent because the Board of Directors of the Company makes an Adverse Recommendation Change (as defined in the Merger Agreement), approves another transaction, or breaches its “no shop” obligations, or if the Merger Agreement is terminated by the Company to enter into a transaction that constitutes a Superior Proposal. The termination fee payable by the Company will be reduced to 50% of the termination fee in the event the Merger Agreement is terminated by the Company prior to the end of the go-shop period, or within 15 days after such period in certain circumstances, to enter into an acquisition agreement that constitutes a Superior Proposal with an Excluded Party. The Parent will be required to pay the Company a reverse termination fee equal to $9,990,915, approximately 5.75% of the equity value of the Company implied by the Transaction, if the Company terminates the Merger Agreement because Parent or Purchaser is in material breach of its representations, warranties, or covenants and that has impeded consummation of the transaction or if Purchaser fails to consummate the transaction when the required conditions have been satisfied.

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Parent and Purchaser have obtained a debt commitment letter that, subject to customary closing conditions, commits JPMorgan Chase Bank, N.A. (“JPMorgan”) and Citizens Bank, N.A. (“Citizens”) to provide debt financing to Parent and Purchaser, which Parent and Purchaser have represented to the Company are sufficient for Purchaser to pay the aggregate consideration in respect of the Shares in the Offer and the Merger and all related fees and expenses to be paid by Parent and Purchaser. In addition, the Guarantor delivered to the Company a limited guarantee of the payment by Purchaser and Parent of Parent’s termination fee, when and if required to be paid pursuant to the Merger Agreement.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 2.1 and is incorporated into this report by reference.

Cautionary Note Regarding Forward-Looking Statements

This communication contains forward-looking statements that involve risks and uncertainties, including statements regarding our pending acquisition by Parent and Purchaser (the “Transaction”), including the expected timing of the closing of the Transaction and considerations taken into account by our Board of Directors in approving the Transaction. These forward-looking statements involve risks and uncertainties, many of which are outside management’s control. If any of these risks or uncertainties materialize, or if any of our assumptions prove incorrect, our actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include risks associated with: the risk that the conditions to the closing of the Transaction are not satisfied, including the risk that a sufficient number of IEC’s stockholders do not participate in the Transaction; the risk that the Merger Agreement may be terminated in circumstances that require IEC to pay a termination fee; potential litigation relating to the Transaction; the failure to satisfy other conditions to completion of the Transaction, including the receipt of all regulatory approvals related to the Transaction (and any conditions, limitations or restrictions placed on these approvals); the failure of the Parent to consummate the necessary financing arrangements; risks that the tender offer and related transactions disrupt current plans and operations and the potential difficulties in employee retention as a result of the proposed transactions; the effects of local and national economic, credit and capital market conditions on the economy in general, including the continued impact of the COVID-19 pandemic, and other risks and uncertainties; uncertainties as to the timing of the consummation of the Transaction and the ability of each party to consummate the Transaction; and the risks described in the filings that we make with the SEC from time to time, including the risks described under the headings “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, which was filed with the SEC on November 20, 2020, and in our latest Quarterly Report on Form 10-Q, which was filed with the SEC on May 5, 2021 and which should be read in conjunction with our financial results and forward-looking statements. Our filings with the SEC are available on the Investors page of our website at www.iec-electronics.com. All forward-looking statements in this communication are based on information available to us as of the date of this communication, and we do not assume, and expressly disclaim, any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

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