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Starrett L S Co. – ‘DEFM14A’ on 4/12/24

On:  Friday, 4/12/24, at 8:27am ET   ·   Accession #:  1437749-24-11842   ·   File #:  1-00367

7 References:   To:  Starrett L S Co. – ‘8-K’ on 3/11/24 for 3/8/24 To:  Starrett L S Co. – ‘10-Q’ on 2/16/24 for 12/31/23 To:  Starrett L S Co. – ‘8-K’ on 1/5/24 for 12/31/23 To:  Starrett L S Co. – ‘8-K’ on 11/13/23 for 11/8/23 To:  Starrett L S Co. – ‘10-Q’ on 11/13/23 for 9/30/23 To:  Starrett L S Co. – ‘8-K’ on 11/8/23 for 11/6/23 To:  Starrett L S Co. – ‘10-K/A’ on 9/27/23 for 6/30/23 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 4/12/24  Starrett L S Co.                  DEFM14A                1:2.3M                                   RDG Filings/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     Definitive Proxy Statement - Merger or Acquisition  HTML   1.84M 

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

Filed by the Registrant ☒

Filed by a party other than the Registrant ☐

Check the appropriate box:

The L.S. Starrett Company

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

The L.S. Starrett Company
121 Crescent Street
Athol, MA 01331

April 12, 2024

Dear Shareholder:

You are cordially invited to attend a virtual special meeting (including any adjournments or postponements thereof, the “Special Meeting”) of holders of shares of Class A common stock, $1.00 per share par value (the “Class A Common Shares”), and holders of shares of Class B common stock, $1.00 per share par value (the “Class B Common Shares” and, together with the Class A Common Shares, the “Shares”), of The L.S. Starrett Company, a Massachusetts corporation (“Starrett” or the “Company”), to be held virtually on May 21, 2024, at 10:00 a.m. Eastern Time. Holders of Shares will be able to virtually attend and vote at the Special Meeting via the internet at meetnow.global/M5DW22D. You will not be able to attend the Special Meeting physically in person. For purposes of attendance at the Special Meeting, all references in the enclosed proxy statement to “present” shall mean virtually present at the Special Meeting.

At the Special Meeting, you will be asked to consider and vote on (i) a proposal to approve the Agreement and Plan of Merger, dated March 8, 2024 (as may be amended, modified or supplemented from time to time, the “Merger Agreement”), by and among Starrett, Uhu Inc., a Delaware corporation (“Parent”) and an affiliate of MiddleGround Capital, and Unicornfish Corp., a Massachusetts corporation (“Merger Sub”) and wholly owned subsidiary of Parent (such proposal, the “Merger Proposal”), (ii) a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Starrett’s named executive officers that is based on or otherwise related to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”) and (iii) a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the Merger Proposal if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”). Upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into Starrett, and the separate corporate existence of Merger Sub will thereupon cease, with Starrett continuing as the surviving corporation (the “Surviving Corporation”) and as a wholly owned subsidiary of Parent (the “Merger”) in accordance with the Massachusetts Business Corporation Act (the “MBCA”).

If the Merger is completed, you will be entitled to receive an amount in cash equal to $16.19 without interest, and less any applicable withholding taxes, for each Share that you own as of immediately prior to the effective time of the Merger (unless you have properly and validly exercised and not withdrawn your appraisal rights).

Starrett’s Board of Directors (the “Company Board”), for reasons described in the enclosed proxy statement, has unanimously: (i) determined that the Merger Agreement and the Merger are fair to, in the best interests of, and advisable to, the Company and the holders of Shares; (ii) adopted the Merger Agreement and duly authorized and approved the execution, delivery and performance of the Merger Agreement by the Company and the consummation of the transactions contemplated by the Merger Agreement upon the terms and subject to the conditions set forth therein; (iii) directed that the Merger Agreement be submitted to the holders of Shares for approval at a meeting of the Company’s shareholders; and (iv) resolved to recommend that, subject to the terms and conditions of the Merger Agreement, the holders of Shares approve the Merger Agreement. The Company Board unanimously recommends, on behalf of Starrett, that you vote: (1) “FOR” the Merger Proposal; (2) “FOR” the non-binding, advisory Compensation Proposal; and (3) “FOR” the Adjournment Proposal, if necessary or appropriate.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement, and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement.

The proxy statement also describes the actions and determinations of the Company Board in connection with its evaluation of the Merger Agreement and the Merger. You should carefully read and consider the entire enclosed proxy statement and its annexes, including, but not limited to, the Merger Agreement, as they contain important information about, among other things, the Merger and how it affects you.

Whether or not you plan to attend the Special Meeting virtually, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone (using the instructions provided in the enclosed proxy card). If you attend the Special Meeting and vote at the meeting your vote will revoke any proxy that you have previously submitted.

If you hold your Shares in “street name,” you should instruct your bank, broker, or other nominee how to vote your Shares in accordance with the voting instruction form that you should receive from your bank, broker, or other nominee. Your bank, broker, or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

If you are a participant in The L.S. Starrett Company Employee Stock Ownership Plan (the “1984 ESOP”) and/or The L.S. Starrett Company 2013 Employee Stock Ownership Plan (the “2013 ESOP” and together with the 1984 ESOP, the “Company ESOPs”), you have the right to direct Argent Trust Company (“Argent”), as the independent trustee for both Company ESOPs, to vote the Shares allocated to your ESOP account (the “Company ESOP Shares”) on the Special Meeting proposals. You can direct Argent to vote your Company ESOP Shares allocated to your ESOP account by signing, dating and returning the enclosed proxy card by mail or providing directions electronically over the internet or telephone (using the instructions provided in the enclosed proxy card).

If you are a participant in the L.S. Starrett Company 401(k) Savings Plan (the “Savings Plan”) and you hold Shares through the 401(k) Stock Fund of the Savings Plan (the “Stock Fund”), you have the right to vote such Shares held through the Stock Fund on the Special Meeting proposals. You can vote the Shares you hold through the Stock Fund by signing, dating and returning the enclosed proxy card by mail or providing directions electronically over the internet or telephone (using the instructions provided in the enclosed proxy card).

Your vote is very important, regardless of the number of Shares that you own. We cannot complete the Merger unless the Merger Proposal is approved by the affirmative vote of the shareholders holding at least two-thirds of the outstanding Shares, with each Class A Common Share entitling the record holder thereof to one (1) vote per Share and each Class B Common Share entitling the record holder thereof to ten (10) votes per Share, as of the close of business on April 11, 2024, which is the record date for the Special Meeting.

If you have any questions or need assistance voting your Shares, please contact our proxy solicitor:

Georgeson

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

Toll-Free: 866-410-5794

On behalf of the Company Board, I thank you for your support and appreciate your consideration of this matter.

Sincerely,

DOUGLAS A. STARRETT
President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Merger, passed upon the merits or fairness of the Merger Agreement or the transactions contemplated thereby, including the proposed Merger, or passed upon the adequacy or accuracy of the information contained in the accompanying proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated April 12, 2024, and, together with the enclosed form of proxy card, is first being mailed on or about April 12, 2024.

The L.S. Starrett Company
121 Crescent Street
Athol, MA 01331

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 21, 2024

Notice is hereby given that a virtual special meeting (including any adjournments or postponements thereof, the “Special Meeting”) of holders of shares of Class A common stock, $1.00 per share par value (the “Class A Common Shares”), and holders of shares of Class B common stock, $1.00 per share par value (the “Class B Common Shares” and, together with the Class A Common Shares, the “Shares”), of The L.S. Starrett Company, a Massachusetts corporation (“Starrett” or the “Company”), to be held virtually on May 21, 2024, at 10:00 a.m. Eastern Time. Holders of Shares will be able to virtually attend and vote at the Special Meeting via the internet at meetnow.global/M5DW22D. You will not be able to attend the Special Meeting physically in person. For purposes of attendance at the Special Meeting, all references in the enclosed proxy statement to “present” shall mean virtually present at the Special Meeting. The Special Meeting is being held for the following purposes:

1. To consider and vote on the proposal to approve the Agreement and Plan of Merger, dated March 8, 2024 (as may be amended, modified or supplemented from time to time, the “Merger Agreement”), by and among Starrett, Uhu Inc., a Delaware corporation (“Parent”) and an affiliate of MiddleGround Capital, and Unicornfish Corp., a Massachusetts corporation (“Merger Sub”) and wholly owned subsidiary of Parent. Upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into Starrett, and the separate corporate existence of Merger Sub will thereupon cease, with Starrett continuing as the surviving corporation (the “Surviving Corporation”) and as a wholly owned subsidiary of Parent (the “Merger”) in accordance with the Massachusetts Business Corporation Act (the “MBCA” and such proposal the “Merger Proposal”);

2. To consider and vote on the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to Starrett’s named executive officers that is based on or otherwise relates to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”); and

3. To consider and vote on any proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the Merger Proposal if there are insufficient votes to approve the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

Only holders of Shares of record as of the close of business on April 11, 2024, are entitled to notice of the Special Meeting and to vote at the Special Meeting or any adjournment, postponement, or other delay thereof.

Starrett’s Board of Directors (the “Company Board”) recommends, on behalf of Starrett, that you vote: (1) “FOR” the Merger Proposal; (2) “FOR” the non-binding, advisory Compensation Proposal; and (3) “FOR” the Adjournment Proposal, if necessary or appropriate.

All holders of Shares are invited to attend the Special Meeting virtually. Whether or not you plan to attend the Special Meeting virtually, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone (using the instructions provided in the enclosed proxy card). If you attend the Special Meeting and vote virtually, your vote will revoke any proxy that you have previously submitted. If you hold your Shares in “street name,” you should instruct your bank, broker, or other nominee how to vote your Shares in accordance with the voting instruction form that you will receive from your bank, broker, or other nominee. Your bank, broker, or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions. If you are a participant in The L.S. Starrett Company Employee Stock Ownership Plan (the “1984 ESOP”) and/or The L.S. Starrett Company 2013 Employee Stock Ownership Plan (the “2013 ESOP” and together with the 1984 ESOP, the “Company ESOPs”), you have the right to direct Argent Trust Company (“Argent”), as the independent trustee for both Company ESOPs, to vote the Shares allocated to your ESOP account (the “Company ESOP Shares”) on the Special Meeting proposals. You can direct Argent to vote your Company ESOP Shares by signing, dating and returning the enclosed proxy card by mail or providing directions electronically over the internet or telephone (using the instructions provided in the enclosed proxy card).  If you are a participant in the L.S. Starrett Company 401(k) Savings Plan (the “Savings Plan”) and you hold Shares through the 401(k) Stock Fund of the Savings Plan (the “Stock Fund”), you have the right to vote such Shares held through the Stock Fund on the Special Meeting proposals.  You can vote the Shares you hold through the Stock Fund by signing, dating and returning the enclosed proxy card by mail or providing directions electronically over the internet or telephone (using the instructions provided in the enclosed proxy card).

Douglas A. Starrett
Chair of the Company Board
Dated: April 12, 2024

The L.S. Starrett Company
121 Crescent Street
Athol, MA 01331

PROXY STATEMENT

FOR THE SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 21, 2024

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY
MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON

MAY 21, 2024

This proxy statement is available on the investor relations page of our website at https://www.starrett.com/about-us/investor-relations. We intend to mail these proxy materials on or about April 12, 2024, to all holders of record of shares of Class A common stock, $1.00 per share par value (the “Class A Common Shares”), and holders of shares of Class B common stock, $1.00 per share par value (the “Class B Common Shares” and, together with the Class A Common Shares, the “Shares”), of The L.S. Starrett Company, a Massachusetts corporation (“Starrett” or the “Company”), entitled to vote at the Special Meeting.

Beginning two (2) business days after notice of the Special Meeting is provided to holders of Shares, a complete list of holders of Shares entitled to notice of the Special Meeting will be available for inspection by Shareholders electronically. Access to and use of this list of Shareholders will be subject to satisfactory verification of Shareholder status and compliance with applicable Massachusetts law. To obtain access to the list of Shareholders, please contact Computershare Inc. at 800-522-6645. The list of holders of Shares entitled to notice of the Special Meeting will also be available for inspection by Shareholders during the Special Meeting via the virtual meeting website at meetnow.global/M5DW22D.

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING VIRTUALLY, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE: (1) BY TELEPHONE; (2) THROUGH THE INTERNET; OR (3) BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time before it is voted at the Special Meeting.

If you hold your Shares in “street name,” you should instruct your bank, broker, or other nominee how to vote your Shares in accordance with the voting instruction form that you will receive from your bank, broker, or other nominee. Your broker or other agent cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

If you are a holder of record of Shares, voting virtually at the Special Meeting will revoke any proxy that you previously submitted. If you hold your Shares through a bank, broker, or other nominee, you must obtain a “legal proxy” in order to vote virtually at the Special Meeting.

If you fail to (1) return your proxy card, (2) grant your proxy electronically over the internet or by telephone or (3) vote virtually at the Special Meeting, your Shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Compensation Proposal or the Adjournment Proposal, if necessary or appropriate (each term as defined in this proxy statement); however, if a quorum is not present, abstentions will count as a vote “AGAINST” the Adjournment Proposal, if necessary or appropriate.

You should carefully read and consider this entire proxy statement and its annexes, including, but not limited to, the Merger Agreement, along with all of the documents incorporated by reference into this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. If you have any questions concerning the Merger Agreement, the Merger, the Special Meeting, or this proxy statement, would like additional copies of this proxy statement or need help voting your Shares, please contact our proxy solicitor:

Georgeson

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

Toll-Free: 866-410-5794

TABLE OF CONTENTS

Page

QUESTIONS AND ANSWERS

The following questions and answers address some commonly asked questions regarding the Merger, the Merger Agreement, and the Special Meeting. These questions and answers may not address all questions that are important to you. You should carefully read and consider the more detailed information contained elsewhere in this proxy statement and the annexes to this proxy statement, including, but not limited to, the Merger Agreement, along with all of the documents we refer to in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under the caption, “Where You Can Find More Information.”

Georgeson

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

Toll-Free: 866-410-5794

FORWARD-LOOKING STATEMENTS

This proxy statement includes forward-looking statements that involve substantial risks and uncertainties. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. The words “anticipate”, “believe”, “contemplate”, “continue”, “could”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “may”, “plan”, “potential”, “predict”, “project”, “should”, “target”, “will”, “would”, or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements include, without limitation, statements regarding the proposed Merger; prospective performance, future plans, events, expectations, performance, objectives and opportunities and the outlook for Starrett’s business; the commercial success of Starrett’s products; the expected timing of the completion of the Merger; the ability to complete the Merger considering the various closing conditions; and the accuracy of any assumptions underlying any of the foregoing. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and are cautioned not to place undue reliance on these forward-looking statements. Actual results or events may differ materially from those currently anticipated due to a number of factors. Factors that could cause future results to differ materially from such expectations include, but are not limited to: uncertainties as to the timing of the Merger; uncertainties as to how many of the Shareholders will vote their stock in favor of the Merger; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including circumstances requiring a party to pay the other party a termination fee pursuant to the Merger Agreement; the ability of the parties to consummate the proposed Merger on a timely basis or at all; the satisfaction of the conditions precedent to the consummation of the proposed Merger, including the ability to secure regulatory approvals and Shareholder approval on the terms expected, at all or in a timely manner; the effects of the Merger (or the announcement or pendency thereof) on relationships with associates, customers, manufacturers, suppliers, employees (including the risks relating to the ability to retain or hire key personnel), other business partners or governmental entities; transaction costs; the risk that the Merger will divert management’s attention from Starrett ’s ongoing business operations or otherwise disrupts Starrett’s ongoing business operations; changes in Starrett ’s businesses during the period between now and the closing; certain restrictions during the pendency of the proposed Merger that may impact Starrett’s ability to pursue certain business opportunities or strategic transactions; risks associated with litigation; and other factors as set forth in Starrett’s Annual Report on Form 10-K, as amended, filed with the SEC on September 27, 2023 and Starrett’s Quarterly Reports on Form 10-Q filed with the SEC on February 16, 2024 and November 13, 2023, and other reports filed with the SEC. The forward-looking statements in this proxy statement speak only as of the date of this proxy statement. Starrett undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by applicable law. The information set forth herein speaks only as of the date hereof.

Consequently, all of the forward-looking statements that we make in this proxy statement are qualified by the information contained or incorporated by reference herein, including: (i) the information contained under this caption; and (ii) the information contained under the caption “Risk Factors,” and information in our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the period ended June 30, 2023 and elsewhere in our most recent filings with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended December 31, 2023, and any subsequent reports on Form 10-K, Form 10-Q or Form 8-K filed with the SEC from time to time and available at www.sec.gov.

These may not be all of the factors that could cause actual results to vary materially from the forward-looking statements. Shareholders are advised to consult any future disclosures that we make on related subjects as may be detailed in our other filings made from time to time with the SEC.

THE SPECIAL MEETING

The enclosed proxy is solicited on behalf of the Company Board for use at the Special Meeting.

Date, Time, and Place

We will hold the Special Meeting virtually on May 21, 2024, at 10:00 a.m. Eastern Time at meetnow.global/M5DW22D and, if applicable, at any adjournment or postponement thereof.

Purpose of the Special Meeting

At the Special Meeting, we will ask Shareholders to vote on proposals to: (i) approve the Merger Proposal; (ii) approve, on a non-binding advisory basis, the Compensation Proposal; and (iii) approve the Adjournment Proposal, if necessary or appropriate.

We do not expect that any matters other than the proposals set forth above will be brought before the Special Meeting, and only matters specified in the notice of the meeting may be acted upon at the Special Meeting.

Shareholders must approve the Merger Proposal in order for the Merger to be consummated. If Shareholders fail to approve the Merger Proposal, the Merger will not be consummated. A copy of the Merger Agreement is attached as Annex A to this proxy statement, which we urge you to read carefully in its entirety.

Record Date; Shares Entitled to Vote; Quorum

Only Shareholders of record as of the Record Date are entitled to notice of the Special Meeting and to vote at the Special Meeting. Beginning two (2) business days after notice of the Special Meeting is provided to Shareholders, a complete list of Shareholders entitled to notice of the Special Meeting will be available for inspection by Shareholders electronically. Access to and use of this electronically available list of Shareholders will be subject to satisfactory verification of Shareholder status and compliance with applicable Massachusetts law. To obtain access to the list of Shareholders electronically, please contact Computershare Inc. at 800-522-6645. The list of Shareholders entitled to notice of the Special Meeting will also be available for inspection by Shareholders during the Special Meeting via the virtual meeting website at meetnow.global/M5DW22D.

The holders of a majority of the votes entitled to be cast on a particular matter, present at the Special Meeting, or represented by proxy, will constitute a quorum as to such matter at the Special Meeting. On the Record Date, there were 6,977,555 Class A Common Shares and 535,312 Class B Common Shares outstanding and entitled to vote at the Special Meeting. In the event that a quorum is not present at the Special Meeting, we expect that the meeting will be adjourned to solicit additional proxies to approve the Merger Agreement.

Vote Required; Abstentions and Broker Non-Votes

On the Record Date, there were 6,977,555 Class A Common Shares outstanding, with each Class A Common Share entitling the record holder thereof to one (1) vote per Share, and 535,312 Class B Common Shares outstanding, with each Class B Common Share entitling the record holder thereof to ten (10) votes per Share. Except as provided by law, all actions submitted to a vote of the Shareholders will be voted on by the holders of Class A Common Shares and Class B Common Shares voting together as a single class. Each outstanding Class B Common Share is convertible at any time at the option of the holder into one (1) Class A Common Share.

Approval of the Merger Proposal requires the affirmative vote of Shareholders holding at least two-thirds of the outstanding Shares as of the close of business on the Record Date, with each Class A Common Share entitling the record holder thereof to one (1) vote per Share and each Class B Common Share entitling the record holder thereof to ten (10) votes per Share.

Approval of the Compensation Proposal, on a non-binding, advisory basis, requires, assuming a quorum is present, the affirmative vote of a majority of the votes properly cast at the Special Meeting on the proposal. The approval of the Compensation Proposal is on a non-binding, advisory basis and is not a condition to the completion of the Merger.

Approval of the Adjournment Proposal requires the affirmative vote of Shareholders holding a majority of the votes properly cast at the Special Meeting on the Adjournment Proposal.

If a Shareholder abstains from voting, that abstention will be counted for purposes of determining whether a quorum is present at the Special Meeting and will have the same effect as if the Shareholder voted “AGAINST” the Merger Proposal. At the Special Meeting, assuming a quorum is present, abstentions will have no effect on the outcomes of the Compensation Proposal or the Adjournment Proposal, if necessary or appropriate. If a quorum is not present, abstentions will count as a vote “AGAINST” the Adjournment Proposal, if necessary or appropriate.

If no instruction as to how to vote is given in a validly executed, duly returned, and not revoked proxy, the proxy will be voted “FOR” (i) the Merger Proposal; (ii) the Compensation Proposal; and (iii) the Adjournment Proposal, if necessary or appropriate.

Each “broker non-vote” will also count as a vote “AGAINST” the Merger Proposal. A “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of such Shares. Starrett does not expect any broker non-votes at the Special Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered “routine,” whereas each of the proposals to be presented at the Special Meeting is considered “non-routine.” As a result, no broker would be permitted to vote your Shares at the Special Meeting without receiving instructions. Failure to instruct your broker on how to vote your Shares will have the same effect as a vote “AGAINST” the Merger Proposal, and will have no effect on the Compensation Proposal, assuming a quorum is present, or the Adjournment Proposal, if necessary or appropriate.

Share Ownership and Interests of Certain Persons

As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, 361,057 Class A Common Shares, representing approximately 5.2% of the Class A Common Shares outstanding on the Record Date, and 62,083 Class B Common Shares, representing approximately 11.6% of the Class B Common Shares outstanding on the Record Date. Such amounts do not include any shares held by the executive officers through the Company ESOPs and/or 401(k) Stock Fund.

Our directors and executive officers have informed us that they currently intend to vote all of their respective Shares (i) “FOR” the Merger Proposal, (ii) “FOR” the non-binding, advisory Compensation Proposal and (iii) “FOR” the Adjournment Proposal, if necessary or appropriate.

Voting of Proxies

If, at the close of business on the Record Date, your Shares are registered in your name with our transfer agent, Computershare Inc., you may cause your Shares to be voted by returning a signed and dated proxy card in the accompanying prepaid envelope, or you may vote virtually at the Special Meeting. Additionally, you may grant a proxy electronically over the internet or by telephone (using the instructions provided in the enclosed proxy card). You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the internet or by telephone. Based on your proxy card or internet and telephone proxies, the proxy holders will vote your Shares according to your directions.

If you plan to attend the Special Meeting and wish to vote virtually, you will need to enter the 16-digit Control Number found next to the label “Control Number” on your proxy card voting instruction form, or in the email sending you the proxy statement. If you attend the Special Meeting, and vote virtually, your vote will revoke any previously submitted proxy. If your Shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the Special Meeting virtually.

Voting instructions are included on your proxy card. All Shares represented by properly signed and dated proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the Shareholder. Properly signed and dated proxies that do not contain voting instructions will be voted: (i) “FOR” the Merger Proposal; (ii) “FOR” the approval of the non-binding, advisory Compensation Proposal and (iii) “FOR” the approval of the Adjournment Proposal, if necessary or appropriate.

If, at the close of business on the Record Date, your Shares are held in “street name” through a bank, broker, or other nominee, you may vote through your bank, broker, or other nominee by completing and returning the voting form provided by your bank, broker, or other nominee or attending the Special Meeting and voting virtually with a “legal proxy” from your bank, broker, or other nominee. If such a service is provided, you may vote over the internet or telephone through your bank, broker, or other nominee by following the instructions on the voting form provided by your bank, broker, or other nominee. If you do not return your bank’s, broker’s, or other nominee’s voting form, do not vote via the internet or telephone through your bank, broker, or other nominee, if possible, or do not attend the Special Meeting and vote virtually with a “legal proxy” from your bank, broker, or other nominee, it will have the same effect as if you voted “AGAINST” the Merger Proposal but will have no effect on the Compensation Proposal, assuming a quorum is present, or the Adjournment Proposal, if necessary or appropriate.

Revocability of Proxies

Shareholder of Record: Shares Registered in Your Name

If you are a Shareholder of record entitled to vote at the Special Meeting, you can revoke or change your proxy at any time before it is voted at the Special Meeting. If you are the record holder of your Shares, you may revoke or change your proxy in any one of the following ways:

At the time the Special Meeting occurs, the most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your Shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

Beneficial Owner: Shares Allocated to a Participant of the Company’s Employee Stock Ownership Plans or Held in a Company 401(k) Plan Account

If you are a participant in a Company Employee Stock Ownership Plan or you hold Shares in a Company 401(k) plan account, you should follow the instructions provided by the applicable plan trustee or administrator.

Adjournments

Although it is not currently expected, the Special Meeting may be adjourned to any other time and to any other place (whether virtual or not) by the Shareholders present or represented at the Special Meeting, although less than a quorum, or by the chair of the Special Meeting, including for the purpose of soliciting additional proxies, if there are insufficient votes at the time of the Special Meeting to approve the Merger Proposal or if a quorum is not present at the Special Meeting. Other than an announcement to be made at the Special Meeting of the time, date, and place (whether virtual or not) of an adjourned meeting, an adjournment generally may be made without notice. Any adjournment of the Special Meeting for the purpose of soliciting additional proxies will allow the Shareholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting as adjourned.

Company Board’s Recommendation

After careful consideration, the Company Board has unanimously (i) determined that the Merger Agreement and the Merger are fair to, in the best interests of, and advisable to, the Company and the holders of Shares; (ii) adopted the Merger Agreement and duly authorized and approved the execution, delivery and performance of the Merger Agreement by the Company and the consummation of the transactions contemplated by the Merger Agreement upon the terms and subject to the conditions set forth therein; (iii) directed that the Merger Agreement be submitted to the holders of Shares for approval at a meeting of the Company’s shareholders; and (iv) resolved to recommend that, subject to the terms and conditions of the Merger Agreement, the holders of Shares approve the Merger Proposal.

Accordingly, the Company Board recommends, on behalf of Starrett, that you vote: (i) “FOR” the Merger Proposal; (ii) “FOR” the non-binding, advisory Compensation Proposal; and (iii) “FOR” the Adjournment Proposal, if necessary or appropriate.

Expenses of Proxy Solicitor

The expense of preparing, printing, and mailing materials related to the Special Meeting is being borne by Starrett. Starrett has retained Georgeson as proxy solicitor at a cost of approximately $16,500 plus expenses.

Anticipated Date of Completion of the Merger

Assuming timely satisfaction of necessary closing conditions, including obtaining the Company Stockholder Approval, Starrett is currently targeting to consummate the Merger in the middle of 2024. Since the Merger is subject to a number of conditions, the exact timing of the Merger cannot be determined at this time.

Delisting and Deregistration of Class A Common Shares

If the Merger is completed, the Class A Common Shares will be delisted from the NYSE and deregistered under the Exchange Act, and Class A Common Shares will no longer be publicly traded. As such, Starrett will no longer file periodic reports with the SEC on account of the Class A Common Shares.

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to be Held on May 21, 2024

The proxy statement is available on the investor relations page of our website at https://www.starrett.com/about-us/investor-relations.

Questions and Additional Information

If you have any questions concerning the Merger, the Special Meeting, or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your Shares, please contact our proxy solicitor:

Georgeson

1290 Avenue of the Americas, 9^th Floor

New York, NY 10104

Toll-Free: 866-410-5794

THE MERGER

This description of the proposed Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger, because this document contains important information about the Merger and how it affects you.

Parties Involved in the Merger

The L.S. Starrett Company

Founded in 1880 by Laroy S. Starrett and incorporated in 1929, Starrett is a leading manufacturer of high-end precision tools, cutting equipment, and metrology systems, and is engaged in the business of manufacturing over 5,000 different products for industrial, professional and consumer markets. Starrett has a long history of global manufacturing experience and currently operates four major global manufacturing plants. All subsidiaries principally serve the global manufacturing industrial base with concentration in the metalworking, construction, machinery, equipment, aerospace and automotive markets. The Company offers its broad array of measuring and cutting products to the market through multiple channels of distribution throughout the world. Starrett® is brand recognized around the world for precision, quality and innovation. The Class A Common Shares are listed and traded on the NYSE under the symbol “SCX”. Starrett’s principal executive offices are located at 121 Crescent Street, Athol, MA 01331, and its telephone number is (978) 249-3551.

Uhu Inc.

Parent is a Delaware corporation and a wholly owned subsidiary of MiddleGround Capital and was formed on February 12, 2024, solely for the purpose of completing the proposed Merger. Parent has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement and other documents or agreements executed and delivered in connection with the Merger Agreement. The principal office is located at c/o MiddleGround Capital Partners, 1500 Aristides Blvd, Lexington, KY 40511, and its telephone number is (859) 721-1466.

Unicornfish Corp.

Merger Sub is a Massachusetts corporation and a wholly owned subsidiary of Parent and was formed on February 16, 2024, solely for the purpose of completing the proposed Merger. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement and other documents or agreements executed and delivered in connection with the Merger Agreement. Upon the completion of the Merger, Merger Sub will cease to exist, with Starrett continuing as the surviving corporation and a wholly-owned subsidiary of Parent (the “Surviving Corporation”). The principal office is located at c/o MiddleGround Capital Partners, 1500 Aristides Blvd, Lexington, KY 40511, and its telephone number is (859) 721-1466.

Effect of the Merger

On the terms and subject to the satisfaction or, to the extent permitted by law, waiver of the conditions set forth in the Merger Agreement, and in accordance with the MBCA, Merger Sub will merge with and into Starrett, with Starrett continuing as the Surviving Corporation. As a result of the Merger, the Class A Common Shares will no longer be publicly traded and will be delisted from the NYSE. In addition, the Class A Common Shares will be deregistered under the Exchange Act, and Starrett will no longer file periodic reports with the SEC with respect to the Class A Common Shares. If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation.

The time at which the Merger will become effective (the “Effective Time”) will occur upon the filing of a duly executed certificate of merger with the Secretary of the Commonwealth of Massachusetts (or at such later time as may be specified in the certificate of merger and agreed to by Merger Sub and Starrett).

Effect on Starrett if the Merger is Not Completed

If the Merger Proposal is not approved by the Shareholders, or if the Merger is not completed for any other reason:

Merger Consideration

At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than any Shares (i) held in the treasury of the Company or owned by the Company or any direct or indirect wholly owned subsidiary of the Company immediately prior to the Effective Time, (ii) owned by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent or Merger Sub immediately prior to the Effective Time or (iii) held by Shareholders who have properly exercised and perfected their demands for appraisal of such Shares in accordance with the MBCA), will be converted into the right to receive an amount in cash equal to $16.19 per Share, without interest (the “Merger Consideration”), and less any applicable withholding taxes, and as of the Effective Time, all such Shares will no longer be outstanding and will automatically be canceled and cease to exist. For more information, please see the section of this proxy statement captioned “The Merger – Merger Consideration.”

After the Merger is completed, you will have the right to receive the Merger Consideration in respect of each Share that you own (less any applicable withholding taxes), but you will no longer have any rights as a Shareholder (except that Shareholders who properly exercise, and do not withdraw, their appraisal rights will have a right to receive payment of the “fair value” of their Shares as determined pursuant to an appraisal proceeding, as contemplated by the MBCA). For more information, please see the section of this proxy statement captioned “The Merger – Appraisal Rights.”

Treatment of Company Equity Awards

Pursuant to the Merger Agreement:

Background of the Merger

The Company Board and management have periodically reviewed and evaluated the Company’s operations, financial performance, long-term strategies, and strategic opportunities, including acquisitions and dispositions of assets and businesses, in light of the industries in which the Company operates, in the economy generally, and in financial markets, with a view towards strengthening the Company’s business and identifying potential opportunities to increase shareholder value and benefit the Company’s other stakeholders.

In April 2020, the Company received an unsolicited letter from Parent indicating its interest in a potential acquisition of the Company. Neither the Company nor the Company Board responded to the letter given the onset of the COVID-19 pandemic, which necessitated management’s and the Company Board’s full attention.

On July 8, 2022, following preliminary conversations between the Company and one of its significant customers about a potential strategic transaction, which we refer to as “Party A,” the Company entered into a confidentiality agreement with Party A (the “Party A NDA”) to facilitate discussions about a possible negotiated transaction between the parties. The Party A NDA did not contain a standstill restriction. From July 2022 to August 2023, the Company and Party A had periodic calls in the ordinary course of business to discuss their respective businesses, their commercial relationship and a potential strategic transaction between the parties.

On November 21, 2022, the Company Board convened a meeting via videoconference with members of management and representatives of Ropes & Gray LLP, the Company’s legal advisor (“Ropes & Gray”), to discuss the process and potential timelines to explore and evaluate a range of strategic alternatives available to the Company, including a sale of the Company. At this meeting, representatives of Ropes & Gray reviewed with the Board the fiduciary duties of a board of directors under Massachusetts law and responded to questions from the directors about considerations for evaluating strategic alternatives, and the directors determined to discuss further at their next regularly scheduled board meeting.

On December 7, 2022, the Company Board convened a regularly scheduled meeting via videoconference and discussed, among other things, strategic planning and strategic alternatives. Following discussion, the Company Board directed Mr. Starrett to contact certain financial advisors with mergers and acquisitions expertise and experience working with companies in the Company’s industry to advise the Company on potential strategic transactions. For the purpose of facilitating discussions with such financial advisors and overseeing the process of exploring a potential strategic transaction, the Company Board, following discussion, determined that it was in the best interests of the Company and its stakeholders to form a special transaction committee of the Company Board (the “Transaction Committee”) comprised of Thomas J. Riordan and Scott W. Sproule. The Transaction Committee was formed for convenience and efficiency and was not formed to address any director conflict of interest. The Transaction Committee was not granted authority to approve any transaction and the Company Board retained authority over final approval of any potential strategic transaction.

On February 3, 2023, the Company Board convened a meeting via videoconference with a representative of Ropes & Gray attending to discuss strategic planning and alternatives. Mr. Starrett noted that he and other directors met with certain financial advisors to discuss their experience and various strategic alternatives for the Company, including a potential sale. The directors asked questions about the meetings with various financial advisors and their respective views of strategic alternatives, following which the Company Board determined to engage a financial advisor and directed Mr. Starrett and certain other directors to solicit fee proposals.

On March 1, 2023, the Company Board convened a meeting via videoconference to discuss the Company’s strategic planning process and to provide the Company Board with an update on the discussions with select financial advisors. Following discussion, the Company Board determined to engage Lincoln International LLC (“Lincoln”), as the Company’s financial advisor in connection with a potential transaction involving the Company, based on Lincoln’s mergers and acquisitions expertise and familiarity with the industry in which the Company operated, and subsequently, on April 17, 2023, the Company executed an engagement letter with Lincoln for such purpose.

On June 6, 2023, the Company Board convened a regularly scheduled meeting via videoconference with representatives of Lincoln and Ropes & Gray attending. Representatives of Lincoln provided the Company Board with an overview of the current mergers and acquisitions market, including activity levels for strategic and financial buyers, the availability of debt financing for acquisitions and interest in transactions within the Company’s sectors. Representatives of Lincoln also discussed with the Company Board a potential timeline for a transaction process, including contacting potential acquirers that management, together with Lincoln, would identify for the Company Board’s consideration and approval as potentially having an interest in acquiring the Company and the financial capability complete such acquisition.

On August 2, 2023, the Company Board convened a meeting via videoconference with members of management and representatives of Lincoln and Ropes & Gray attending. At the meeting, members of management presented to the Company Board a preliminary draft of three-year financial projections for the Company that were prepared by management in the ordinary course of business. Members of management responded to questions from the Company Board about the financial projections and the Company Board provided feedback on certain assumptions used in their preparation and requested that management make certain adjustments. Also at this meeting, the Company Board discussed a list of over 40 parties that management and Lincoln believed may have an interest in acquiring the Company and the financial capacity to complete the transaction, as well as a list of parties that management had considered but did not recommend contacting. Both lists were comprised of strategic and financial organizations. Members of management and representatives of Lincoln responded to questions from the Company Board about the rationale for the inclusion or exclusion of certain parties and discussed certain other alternatives. A representative of Lincoln also presented marketing materials that it intended to send to potentially interested parties about the potential opportunity and provided the Company Board with an update on the current mergers and acquisition and financing markets, as well as Lincoln’s view about anticipated merger activity over the next couple fiscal quarters, Lincoln’s perspective of the Company’s valuation and variables that could impact the value and an updated illustrative timeline for a potential sale process involving the Company. Following discussion, the Company Board directed management and Lincoln to contact the parties that management and Lincoln identified as being potentially interested in a strategic transaction with the Company, request that such parties participate in a process and provide parties who execute confidentiality agreements with marketing materials.

On August 5, 2023, the Company Board, acting by unanimous writing consent, approved the Company’s three-year financial projections, which the Company’s management had revised to reflect feedback received from the Company Board at the August 2 meeting of the Company Board.

On August 9, 2023, Mr. Starrett contacted a representative of Party A to inform him that the Company was launching a sale process and inviting Party A to participate in the process. The parties did not discuss any transaction terms during this call. Following Mr. Starrett’s discussion, Lincoln provided Party A with a draft amendment to the Party A NDA, which provided for, among other things, a standstill restriction applicable to both parties. The parties executed the amendment to the Party A NDA on August 13, 2023.

Between August 14, 2023 and August 24, 2023, Lincoln contacted approximately 45 parties, comprised of 23 strategic parties and 22 financial parties. Of this group, the Company negotiated and executed confidentiality agreements with six strategic parties and 19 financial parties, including Parent. All of the confidentiality agreements included a 12-month standstill restriction, which the Company could agree to waive, and certain of which contained a customary provision indicating that the standstill restriction would “fall away” if, among other things, the Company entered into a definitive agreement to be acquired by another party. Also, during this period, representatives of Lincoln prepared and sent a process letter to parties that signed confidentiality agreements, which requested that each party submit by September 21, 2023 a written indication of interest that would include, among other things, a price at which it would be willing to acquire 100% of the outstanding equity of the Company.

On September 6, 2023, the Company Board convened a regularly scheduled meeting, with representatives of Lincoln and Ropes & Gray attending. The representatives of Lincoln provided an update on its outreach to potential counterparties and feedback received to date, as well as progress on having preliminary diligence calls with interested parties. The directors asked Lincoln questions about the process and provided feedback on a draft confidential information presentation being prepared by Lincoln and management for meetings with potential bidders.

On September 21, 2023, the Company received non-binding indications of interest, which were based on public information and limited information contained in marketing materials provided by the Company, from seven financial bidders, including Parent, and no strategic bidders. Parent submitted an indication of interest to acquire 100% of the Company’s shares in cash for total consideration based on an enterprise value of $200.0 million to $215.0 million, which was also contingent upon satisfactory completion of Parent’s confirmatory diligence. Other indications of interest provided for enterprise values of between $116.3 million and $200.0 million. One bidder, which we refer to as “Party B,” proposed to acquire the Company for $25.61 per Share on a fully diluted basis (the “September 21 Party B Proposal”) and indicated it could complete its diligence and sign a definitive agreement with the Company within 21 days if the Company granted it exclusivity, while other bidders requested 45-70 days to complete diligence and certain bidders requested exclusivity.

On September 25, 2023, two additional financial bidders, submitted indications of interest. These parties proposed to acquire 100% of the Company’s shares based on an enterprise value between $155.0 million to $185.0 million and between $128.0 million and $156.0 million, respectively.

On September 26, 2023, Mr. Starrett provided the Company Board with a summary of the indications of interest received from potential bidders, noting that the indications of interest proposed a wide range of purchase prices and the bottom two were meaningfully below the others. Following review of the summary, the Company Board determined that it was in the best interests of the Company and its stakeholders not to provide exclusivity to any party at this time and to advance the five bidders who proposed the highest prices to the next round, which would allow management and Lincoln to focus their efforts on the parties likely to deliver the most value to Shareholders. Following this meeting of the Company Board, representatives of Lincoln contacted Parent and the other four parties being advanced to the next round of the process in order to schedule presentations by management and site visits as part of the parties’ diligence process.

On October 2, 2023, the chief executive officer of Party A contacted Mr. Starrett to inform him that Party A, which had not submitted a written indication of interest, would not engage in a process to acquire the Company.

During the period between October 12, 2023 and October 27, 2023, members of the Company’s management team met in person with representatives of the five parties that remained in the process and provided tours of the Company’s facility in Athol, Massachusetts to certain of the parties. During this time, each remaining bidder was also provided access to a virtual data room and a quality of earnings analysis prepared on behalf of the Company.

On October 19, 2023, Lincoln sent a process letter (the “October Process Letter”) to each of Parent and the four other parties that participated in management meetings. The October Process Letter requested that, on or before November 9, 2023, each party submit, among other things, a revised price at which it would be willing to acquire the Company, its intention with respect to the Company’s management and employees and a summary of any key issues with the structure and terms of the proposed transaction set forth in a draft merger agreement to be made available to bidders. The draft merger agreement provided for, among other things, (i) a Company termination fee equal to 2.0% of transaction equity value, which would be payable by the Company if the transaction were terminated under certain specified circumstances, (ii) a Parent termination fee equal to 8.0% of transaction equity value, which would be payable by Parent if the transaction were terminated under certain specified circumstances and (iii) a “hell or high water” standard with respect to obtaining regulatory approvals. Over the course of the next several weeks, members of the Company’s management team continued to conduct diligence calls with and provide diligence information to representatives of potential bidders.

On November 9, 2023, Parent submitted an updated non-binding indication of interest to acquire the Company based on an enterprise value of $181.75 million, or approximately $22.11 per Share in cash on a fully diluted basis (the “November 9 Parent Proposal”). The November 9 Parent Proposal noted that Parent had significant due diligence to complete, including about environmental matters, employee benefits and the Company’s operations, but expected to be able to complete its due diligence and execute definitive documentation within 35 days following execution of the November 9 Parent Proposal and requested that the Company enter into a 21-day exclusivity period with Parent. The November 9 Parent Proposal also included a list of key issues related to the draft merger agreement, which noted, among other things, that Parent would propose a Company termination fee in an amount equal to 3.5% of transaction equity value and a Parent termination fee in an amount equal to 7.0% of transaction equity value. Party B also submitted an updated non-binding indication of interest to acquire the Company for $17.00 per Share in cash on a fully diluted basis, representing an enterprise value of approximately $142.7 million (the “November 9 Party B Proposal”), which was approximately 30% below the price Party B proposed in the September 21 Party B Proposal. The November 9 Party B Proposal indicated that Party B could complete its due diligence and execute definitive documentation within seven days of executing the November 9 Party B Proposal and requested that the Company enter into an exclusivity period for an initial period of seven days. The November 9 Party B Proposal also included a markup of the draft merger agreement, which identified, among other things, a Company termination fee in an amount equal to 3.75% of transaction equity value, a Parent termination fee in an amount equal to 5.0% of transaction equity value and the requirement that the Company reimburse Party B for its expenses, in the event the transaction was terminated for failure to obtain shareholder approval, in an amount up to a cap to be determined. On November 10, 2023, another financial bidder, which we refer to as “Party C,” submitted an updated non-binding indication of interest to acquire the Company based on an enterprise value of $165.0 million, or approximately $19.93 per Share on a fully diluted basis (the “November 10 Party C Proposal”), which was within the range Party C previously proposed. The November 10 Party C Proposal indicated that Party C could complete its due diligence in five weeks and execute definitive documentation within 45 days of entering into exclusivity. The November 10 Party C Proposal also included a comment memo related to the draft merger agreement, which noted, among other things, that Party C would propose a Company termination fee in an amount equal to 4.0% of transaction equity value, a Parent termination fee in an amount equal to 6.0% of transaction equity value and the requirement that the Company reimburse Party C for its expenses, in the event the transaction was terminated for failure to obtain Shareholder approval, in an amount up to $1.5 million. Each of the November 9 Parent Proposal, the November 9 Party B Proposal and the November 10 Party C Proposal indicated that the applicable bidder would be willing to discuss the role that management would have following the closing, but at no point during the process did the Company Board authorize management to have such conversations with any of the bidders, nor has Parent had discussions with management about their post-closing employment arrangements through the date of this proxy statement. No other indications of interest were received in response to the October Process Letter.

On November 13, 2023, the Transaction Committee convened a meeting via videoconference with Mr. Starrett and representatives of Lincoln and Ropes & Gray attending, to discuss each of the November 9 Parent Proposal, the November 9 Party B Proposal and the November 10 Party C Proposal. A representative of Lincoln noted that Party B had engaged several third-party advisors, completed more diligence than the other parties and delivered a mark-up of the merger agreement, which positioned it to be capable of entering into a definitive agreement more quickly than the other parties, but its proposed aggregate purchase price and resulting EBITDA multiple were meaningfully lower than in the September 21 Party B Proposal and the other proposals. He also noted that the proposed purchase prices in the November 9 Parent Proposal and the November 10 Party C Proposal represented EBITDA multiples similar to what was in their original bids, although neither had done as much diligence as Party B to inform their proposals and both only provided high-level issues lists regarding the draft merger agreement. In addition, both Parent and Party C stated that they would require extended periods to complete diligence and sign a definitive agreement. A representative of Ropes & Gray then provided a brief overview of the proposed merger agreement terms included in the proposals, noting, among other things, that the proposed terms were similar and generally within an expected range for a transaction of this nature. Following discussion, the Transaction Committee directed Lincoln to contact Parent and Party C and request best and final proposals to acquire 100% of the Company’s shares on or before December 1, 2023 and to encourage each party to complete substantial diligence to inform those bids. The directors also confirmed that, given Party B’s proposed price, that Party B should not be asked to submit an updated bid and that management should not prioritize any further diligence inquiries from Party B. A representative of Ropes & Gray then reminded the Company Board of its fiduciary duties in connection with a transaction involving a sale of the Company. He noted that certain bidders invited management to rollover their Shares in the transaction and anticipated negotiating post-closing compensation packages with officers, which could mean management has different interests in a sale transaction than other Shareholders. Mr. Starrett confirmed that neither he nor other members of management had discussed a roll-over of Shares with any bidder and acknowledged that they would not have any such conversations without permission from the Company Board. To further mitigate any potential conflicts, the representative of Ropes & Gray recommended that the independent directors meet regularly in executive session without Mr. Starrett, the sole management director on the Company Board, to discuss the potential transaction.

Following the November 13 Transaction Committee meeting and at the direction of the Company Board, representatives of Lincoln contacted representatives of Parent and Party C to request a revised indication of interest that should reflect the additional diligence performed by the parties. Representatives of Lincoln also contacted representatives of Party B to inform them that Party B would not be invited to continue in the process. Following these calls, representatives of Lincoln sent to each of Parent and Party C a process letter, which indicated requested the parties submit revised indications of interest and a markup of the merger agreement on or before December 1, 2023.

On November 20, 2023, the Company Board convened a meeting via videoconference with representatives of Lincoln and Ropes & Gray attending, to discuss the Company’s sale process. A representative of Lincoln noted that, at the Transaction Committee’s direction, each of Parent and Party C were invited to submit by December 1, 2023 a non-binding letter of intent to acquire the Company, and Party B was informed that it would not be invited to continue in the process. A representative of Lincoln then discussed the status of Parent’s and Party C’s respective diligence processes. A representative of Ropes & Gray then reminded the directors of their fiduciary duties in connection with the proposals and their consideration of the potential transaction. Also, at that meeting, after the representatives from Lincoln had departed the meeting, the Company Board discussed the terms of a proposed engagement letter between the Company and Lincoln pursuant to which Lincoln would provide a fairness opinion in connection with the potential transaction, in addition to the financial advisory services for which Lincoln was already engaged. Following discussion, the Company Board unanimously authorized the Company to enter into the engagement letter with Lincoln and directed Ropes & Gray to finalize the engagement letter with Lincoln, and the Company executed the engagement letter with Lincoln later that day.

On December 1, 2023, Parent submitted a revised non-binding indication of interest, which reiterated its prior proposal to acquire the Company based on an enterprise value of $181.75 million, or approximately $22.11 per Share on a fully diluted basis (the “December 1 Parent Proposal”) and noted a number of diligence workstreams that it would need to complete prior to entering into a definitive agreement. The December 1 Parent Proposal included a markup of the merger agreement, which proposed, among other things, a Company termination fee in an amount equal to 3.5% of transaction equity value, a Parent termination fee in an amount equal to 7.0% of transaction equity value, and a provision that required the Company to reimburse Parent for its expenses up to an unspecified cap if the Shareholders failed to approve the proposed transaction.

On December 5, 2023, Party C submitted a revised non-binding indication of interest to acquire the Company in cash based on an enterprise value of $150.0 million, or approximately $17.91 per Share on a fully diluted basis (the “December 5 Party C Proposal”), which was approximately 9% below the proposed price in the November 10 Party C Proposal and noted that Party C would need to complete diligence on several issues, including finance, employee benefits and environmental matters, before signing a definitive agreement. The December 5 Party C Proposal included a markup of the merger agreement, which identified, among other things, a Company termination fee in an amount equal to 4.0% of transaction equity value and a Parent termination fee in an amount equal to 7.0% of transaction equity value.

On December 6, 2023, the Company Board convened a meeting via videoconference with representatives of Lincoln and Ropes & Gray attending to discuss the December 1 Parent Proposal and the December 5 Party C Proposal. A representative of Lincoln noted that the December 1 Parent Proposal reflected an enterprise value approximately $30.0 million higher than the December 5 Party C Proposal, and that Parent had been significantly more active in the diligence process than Party C in the prior month. A representative of Ropes & Gray also provided the Company Board with a brief overview of key terms in the revised merger agreement in the December 1 Parent Proposal. The Company Board discussed the fact that Parent had proposed a materially higher purchase price, was significantly more advanced in their diligence process than Party C, the proposed timing to executing definitive documentation noted in both the December 1 Parent Proposal and the December 5 Party C Proposal and potential next steps to take with respect to both bidders. Following that discussion, the Company Board determined that it was in the best interests of the Company and its stakeholders to not provide further feedback to Party C at that time and request that Parent submit its “best and final” proposal by December 11, 2023, including a specific list of outstanding diligence items, and directed Lincoln to communicate the same to Parent. Following that meeting, representatives of Lincoln communicated such message to representatives of Parent.

On December 11, 2023, Parent submitted a non-binding revised indication of interest to acquire the Company in cash based on an enterprise value of $181.75 million, which reflected a price of approximately $21.85 per Share on a fully diluted basis, based on updated share counts (the “December 11 Parent Proposal”). The December 11 Parent Proposal noted that it remained subject to potential adjustments based on its further analysis of potential costs related to, among other things, environmental and pension matters. The December 11 Parent Proposal also included significant additional requests related to environmental due diligence and the Company’s pension plan. Parent also requested that the Company execute an exclusivity agreement for a period of 30 days following execution of the December 11 Parent Proposal.

On December 12, 2023, the Transaction Committee, Mr. Starrett and representatives of Lincoln and Ropes & Gray convened a meeting via videoconference to discuss the December 11 Parent Proposal. Members of the Transaction Committee asked representatives of Lincoln about the nature and timing of Parent’s diligence requests and discussed the potential impact of such work on Parent’s proposed purchase price and the timeline for the transaction. Following discussion, the Transaction Committee directed the Lincoln to solicit additional details about Parent’s diligence requirements.

Later on December 12, 2023, representatives of Lincoln and Parent discussed Parent’s diligence requirements, including work related to Phase I environmental site assessments at certain of the Company’s owned manufacturing facilities. Lincoln then provided a report about the call to the Transaction Committee, which, based on the discussion, agreed to grant exclusivity to Parent for 15 days, which could be extended for an additional 15 days if Parent satisfied certain conditions related to the purchase price and completion of diligence. The parties negotiated an exclusivity agreement on such terms, which was executed on December 14, 2023.

Between December 14, 2023 and December 29, 2023, Parent engaged in significant diligence, including working with outside advisors to conduct Phase I environmental site assessments of certain Company-owned facilities. On December 29, 2023, the initial period of exclusivity expired, and representatives of Parent reported that its diligence related to environmental and pension costs was ongoing, but that it had not identified anything outside of the environmental and pension costs thus far that would reduce value and expected full diligence reports from its advisors in the first week of January.

On January 2, 2024, the Company Board convened a meeting via videoconference with representatives of management, Lincoln and Ropes & Gray attending, to discuss the status of Parent’s remaining areas of diligence, including environmental and pension costs. A representative of Lincoln reminded the Board that the initial exclusivity period ended on December 29, 2023, and reported that Parent had made substantial progress towards completing its remaining environmental diligence. Parent also indicated that it expected to have an estimate of pension wind-down costs by January 5, 2024, after which it would be in a position to share with the Company any findings that could potentially impact value. A representative of Lincoln also noted that Parent had substantially completed its other areas of outstanding diligence. Following that discussion, the Company Board determined that, although Parent had not technically satisfied the conditions related to the purchase price and completion of diligence to extend exclusivity, it was in the best interests of the Company and its stakeholders for management and the Company’s advisors to continue working directly with Parent for the time being and for the Company Board to reconvene after Parent received its environmental and pension reports and communicated its findings with the Company.

From January 8, 2024 to January 22, 2024, Parent continued to progress environmental and pension diligence and provided the Company with updates on its findings and the impact of such findings on valuation, including the fact that the costs it attributed to the Company’s pension plan would be higher than it had initially anticipated.

On January 17, 2024, Mr. Starrett and Lincoln spoke with representatives of Parent to discuss the process and status of Parent’s environmental and pension diligence findings, including the proposed incremental costs they expect to incur for each after a potential acquisition. Following these calls, the Transaction Committee convened a meeting via videoconference with Mr. Starrett and representatives of Lincoln and Ropes & Gray attending, to report on the call that Mr. Starrett and Lincoln had with representatives of Parent. Lincoln summarized Parent’s view and the participants discussed a variety of potential responses and, following discussion, the Transaction Committee determined that the pension and environmental advisors to Parent should discuss Parent’s conclusions as promptly as possible and to request that Parent subsequently provide an updated proposal based on its diligence. Following the meeting, Lincoln communicated the requests to Parent.

On January 22, 2024, representatives of the Company, Parent and their respective advisors, held calls to discuss Parent’s conclusions about the environmental and pension matters.

On January 23, 2024, the Transaction Committee convened a meeting via videoconference with Mr. Starrett and representatives of Lincoln and Ropes & Gray attending, to provide the Transaction Committee with an update on the discussion the prior day with Parent and its advisors. The representatives of Lincoln and Ropes & Gray provided their perspectives and responded to questions from the Transaction Committee. Also on January 23, 2024, the Company provided to Lincoln preliminary financial reports for the Company’s second fiscal quarter ending December 31, 2023.

On January 26, 2024, management provided Lincoln with updated financial forecasts for the Company’s 2024 fiscal year, based on the Company’s actual results for the first two quarters and known trends for the second half of the fiscal year, and reaffirmed their forecasts for the Company’s 2025 and 2026 fiscal years, all of which were also shared with Parent (“Management’s Projections”). Management’s Projections reflected reductions in revenue and EBITDA (which were driven by lower than anticipated utilization due to broader market labor shortages and underperformance in a certain business segment) when compared to the Company’s forecasts prepared in August 2023. Please see the section entitled “- Certain Unaudited Prospective Financial Information” for further information about Management’s Projections. Parent subsequently submitted a revised indication of interest to acquire the Company based on enterprise value of $127.7 million, which reflected $16.33 per Share on a fully diluted basis (the “January 26 Parent Proposal”). The January 26 Parent Proposal noted that the reduction in purchase price reflected deduction for projected costs related to environmental and pension matters, as well as the decline in financial performance of the Company in the prior fiscal quarter and forecast for the full fiscal year 2024. The January 26 Parent Proposal also included a summary of remaining diligence and deal-related items to complete.

On January 27, 2024, the Transaction Committee convened a meeting via videoconference with Mr. Starrett and representatives of Lincoln and Ropes & Gray attending to discuss the January 26 Parent Proposal and the strategy to respond. Lincoln provided an analysis of the January 26 Parent Proposal compared to its prior proposals and responded to questions from the directors about the process and options for responding to Parent.

On January 29, 2024, the Company Board convened a meeting via videoconference with members of management and representatives of Lincoln and Ropes & Gray attending to discuss the January 26 Parent Proposal. The Company Board discussed the costs related to environmental and pension diligence, which the Company Board believed other potential bidders would also identify through diligence and reflect in their valuation (since these matters would typically be evaluated by other potential bidders in these circumstances), Parent’s proposed price, potential next steps, including providing Parent with a counterproposal to the January 26 Parent Proposal and the timing of such counterproposal and alternatives to not proceeding with a sale of the Company, including remaining as a publicly traded company and the Company executing on its long-term strategy. Following discussion, the independent directors went into executive session without management present, and determined that it was in the best interests of the Company and its stakeholders for the Transaction Committee to coordinate with Lincoln to prepare a counterproposal to the January 26 Parent Proposal and to deliver such counterproposal to Parent as soon as practicable with a view towards potentially signing and announcing a transaction by mid-February if the parties could agree on a purchase price. Following the executive session, the independent directors explained their proposed response to the full Company Board and the Company Board determined to provide Parent with a counterproposal of $17.50 per Share on a fully diluted basis, and to communicate to Parent that the Company Board expected to execute definitive documentation in two weeks. Following the meeting, Lincoln communicated that message to Parent, which indicated that it would need to complete additional diligence before responding to the Company’s counterproposal, but that it would seek to execute definitive documents in two weeks.

From February 2, 2024 to February 12, 2024, Parent continued to conduct diligence of the Company and Ropes & Gray and Dechert LLP (“Dechert”), Parent’s legal advisor, exchanged drafts of the merger agreement and corresponding disclosure schedules on behalf of the parties.

On February 9, 2024, the Company Board convened a meeting via videoconference with members of management and representatives of Lincoln and Ropes & Gray attending. Mr. Starrett provided the Company Board with an update about the diligence conducted by Parent following delivery of the Company’s counterproposal of $17.50 per Share to the January 26 Parent Proposal, including reviewing the Company’s recent financial results and operations. The Company Board discussed the alternatives to not proceeding with a sale of the Company, including remaining as a publicly traded company and the Company executing on its long-term strategy in the event that Parent were to reject the counterproposal, including the potential risks, such as business, competitive, industry, regulatory, environmental and market risks. The Company Board also discussed next steps, including the potential timing to signing and announcing a transaction with Parent should the parties come to a mutually agreeable purchase price and the potential impact on the timing of the Company’s announcement of second quarter earnings. The Company Board also discussed that, prior to approving any transaction with Parent, Lincoln would present the Board with its valuation analyses and deliver its fairness opinion to the Board. A representative of Ropes & Gray also provided the Company Board with a summary of the markup to the draft merger agreement and disclosure schedules received from Dechert on the evening of February 8, 2024, which Ropes & Gray was reviewing with the Company. Following discussion, the Company Board determined it was in the best interests of the Company and its stakeholders for management and the Company’s advisors to continue negotiating the merger agreement and related transaction documents with Parent and to reconvene the following week to determine progress and the outstanding material issues at that time.

On February 12, 2024, Mr. Starrett and John Stewart, Managing Partner of Parent, held a call to discuss the status of negotiations, remaining diligence, perspective of the proposed deal terms and expectations for the business the parties completed the transaction. Messrs. Starrett and Stewart did not discuss the nature of any ongoing role of the Company’s current management with the business after closing.

On February 13, 2024, the Company Board convened a meeting via videoconference with members of management and representatives of Lincoln and Ropes & Gray attending. A representative of Lincoln provided the Company Board with Lincoln’s preliminary valuation analyses, which included (i) a discounted cash flow analysis and (ii) an analysis based on selected public companies. The Company Board discussed the valuation analyses with representatives of Lincoln and Lincoln then summarized its relationship disclosure for the Company Board and disclosed that, although Lincoln provided financial advisory services to portfolio companies affiliated with Parent in the prior two years, the members of the Lincoln team working with the Company were not involved. The Company Board discussed such disclosure and did not believe such relationships would impair Lincoln’s ability to deliver an unbiased opinion. After the representatives of Lincoln left the meeting, Mr. Starrett provided the Company Board with an update on his conversation with Mr. Stewart on February 12, 2024, regarding the Company’s counterproposal of $17.50 per Share, as well as Parent’s expectations for the transaction and operation of the business after a sale. The Company Board discussed potential timing of signing and announcing a transaction if the parties could agree on a purchase price. A representative of Ropes & Gray then summarized for the Company Board the status of the merger agreement and other transaction documents. The Company Board also discussed the timing of the Company’s earnings announcement. Following discussion, the Company Board determined that it was in the best interests of the Company and its stakeholders to direct management and the Company’s advisors to continue negotiating the merger agreement and related transaction documents with Parent with a view towards signing and announcing a transaction by February 15, 2024 if the parties could agree on a purchase price.

Between February 13, 2024 and February 15, 2024, Ropes & Gray and Dechert continued to exchange transaction documents, including drafts of the merger agreement, the related disclosure schedules and Parent’s equity commitment letter and limited guarantee.

On February 16, 2024, the Company Board convened a meeting via videoconference with members of management and representatives of Lincoln and Ropes & Gray attending. Mr. Starrett opened the meeting by providing the Board with an update on correspondence received by Lincoln from John Stewart on February 15, 2024, in which Mr. Stewart indicated, among other things, that Parent would not increase its previously proposed purchase price of $16.33 per Share and would not be able to sign a definitive agreement for a proposed transaction at this time. Mr. Stewart explained that several of Parent’s diligence requests remained outstanding and that Parent had learned since it submitted the January 26 Parent Proposal that the Company had underperformed its prior forecasts. Mr. Stewart reiterated that, despite these challenges, Parent remained interested in completing a transaction with the Company once all of Parent’s diligence requests were fulfilled. The independent directors then held an executive session, at which they discussed how and whether to respond to Parent and the advantages and disadvantages of continuing to engage with Parent. Following the executive session, Mr. Starrett rejoined the meeting and, following further discussion, the Company Board determined that it was in the best interests of the Company and its stakeholders for the Company to cease discussion with Parent for the time being and for the Company to file its second quarter earnings later in the day after the market closed. The Company Board also determined to convene a meeting following the market’s reaction to the Company’s earnings and any further steps related to a potential transaction.

After the close of trading on the NYSE on February 16, 2024, the Company issued its earnings release and Quarterly Report on Form 10-Q for the quarter ending December 31, 2023, which reflected a net loss for the quarter and lower net sales and gross margin compared to the prior year. The Company’s stock price declined approximately 19% on the trading day following the earnings announcement.

On February 21, 2024, the Company Board convened a meeting via videoconference with members of management and representatives of Lincoln and Ropes & Gray attending. The Company Board discussed the market’s reaction to the Company’s earnings and the significant decline in the Company’s stock price, as well as considerations for a potential response to Parent and alternatives if the parties could not reach terms, including contacting other parties or remaining an independent company. The Company Board also considered the potential costs related to environmental and pension diligence, which the Company Board believed another bidder would also identify during its diligence process. The Company Board determined not to contact other parties about a potential transaction at this time, because of, among other reasons, the time, expense and distraction of management required to engage with other parties, the fact that it believed another party was unlikely to propose a higher price than Parent after completing diligence and factoring in the Company’s recent financial performance and the risk that Parent may withdraw its bid if negotiations were further delayed.

On February 23, 2024, a representative of Parent contacted a representative of Lincoln and stated that Parent’s investment committee remained willing to acquire the Company for$16.33 per Share.

On February 25, 2024, the Company Board convened a meeting via videoconference with representatives of Ropes & Gray attending. The Company Board discussed the potential transaction and Parent’s proposed price as well as the reasons for the Company not remaining as an independent company, including the risks and costs related to the Company executing on its long-term strategy. Each of the directors confirmed that they would support a transaction at $16.33 per Share, so long as the parties could negotiate satisfactory definitive agreements and the transaction was announced within a reasonable period of time. The Company Board directed the Transaction Committee to share the Company Board’s determination with Lincoln and to direct Lincoln to deliver the message to Parent and its financial advisor, which they did following the call.

On February 26, 2024, Lincoln relayed the Company Board’s perspective to representatives of William Blair & Company L.L.C., Parent’s financial advisor. Later that day, a representative of Parent contacted a representative of Lincoln to state that Parent was prepared to proceed at $16.33 per Share, but noted that Parent needed to complete certain diligence calls to finalize their diligence.

On February 27, 2024, Dechert sent to Ropes & Gray revised drafts of the merger agreement and other transaction documents. The revised draft of the merger agreement included, among other things, a Company termination fee in an amount equal to 3.0% of transaction equity value, a Parent termination fee in an amount equal to 6.0% of transaction equity value and reimbursement of Parent’s expenses up to an unspecified cap if the Shareholders failed to approve the proposed transaction.

Between February 27, 2024 and March 4, 2024, the parties continued to negotiate the terms of the merger agreement, including, among other things, the amount of the Company termination fee, the amount of the Parent termination fee and the circumstances under which such payment would become payable and the inclusion of the expense reimbursement provision. Also, during this time, the Company responded to Parent’s remaining diligence requests.

On March 6, 2024, the Company Board convened its regularly scheduled meeting in person and via videoconference with members of management attending. Representatives of Ropes & Gray joined a portion of the meeting to provide the Company Board with an update on the outstanding issues in the draft merger agreement, including recent changes to the amounts of the proposed fees that would be payable if the transaction was terminated under certain circumstances, including Company Termination Fee and the Parent Termination Fee, and that Parent was seeking reimbursement from the Company of its expenses in an amount not to exceed $3.0 million, if the Shareholders failed to approve the proposed transaction. The representative of Ropes & Gray indicated that the Company had consistently resisted Parent’s request for reimbursement. The representative of Ropes & Gray then noted for the Company Board that the other transaction documents, including Parent’s documents related to its debt and equity financing commitments, were either complete or in near final form.

Later on March 6, 2024, Parent sent to Lincoln a revised offer of $16.00 per Share, which reflected certain incremental transaction costs it would bear and that it believed should reduce the aggregate consideration payable to the Company and an updated fully-diluted share count based on updated information provided by the Company.

On March 7, 2024, the Transaction Committee convened a meeting via teleconference with Mr. Starrett and representatives of Lincoln and Ropes & Gray attending to discuss Parent’s revised proposal. Following discussion, the Transaction Committee determined that it would not accept a reduction in the aggregate consideration payable based on the additional transaction expenses raised by Parent, but would accept an adjustment to the per share price to reflect the updated share count, such that the each fully-diluted Share represented a pro rata portion of the aggregate consideration. A representative of Lincoln noted that, based on the Transaction Committee’s position, the updated share price would be $16.19 per Share. The Transaction Committee instructed Lincoln to communicate the Transaction Committee’s position to Parent, which it did following the meeting. Later that day, Parent agreed to proceed with the proposed transaction to acquire the Company $16.19 per Share in cash (the “Final Parent Proposal”). The parties and their advisors then proceeded to complete negotiation of the transaction agreements.

On March 8, 2024, the Company Board convened via videoconference with members of management and representatives of Lincoln and Ropes & Gray attending. A representative of Ropes & Gray reminded the directors of their fiduciary duties under Massachusetts law and provided the Company Board with a summary of the key terms of the merger agreement, including, among others, (i) the Company Board’s ability to change its recommendation and, under appropriate circumstances, terminate the Merger Agreement to accept a superior proposal, (ii) the fee payable by the Company if the Merger Agreement was terminated under certain circumstances would be $4.35 million, or 3.5% of transaction equity value, (iii) the fee payable by Parent if the Merger Agreement was terminated under certain circumstances would be $8.7 million, or 7.0% of transaction equity value and (iv) the anticipated timeline of events between signing and closing the proposed transaction, including the timing of filing a proxy statement and convening a Shareholders meeting to approve the proposed transaction. The representative of Ropes & Gray also noted for the Company Board that in event the Shareholders did not approve the proposed transaction, the Company would be required to reimburse Parent for its expenses incurred in connection with the Merger Agreement, up to $2.0 million.

Representatives of Lincoln then reviewed with the Company Board its updated financial analyses of the Final Parent Proposal, as well as the process conducted to date. Representatives of Lincoln then delivered to the Company Board Lincoln’s oral opinion, subsequently confirmed in Lincoln’s written opinion, dated as of March 8, 2024, to the effect that, as of such date and subject to and based on the procedures followed, assumptions made, qualifications, conditions and limitations on the review undertaken and other matters considered by Lincoln as set forth in its written opinion, the Merger Consideration to be received by the Shareholders, other than any Shares described in Section 2.1(b) of the Merger Agreement and any Dissenting Shares (as defined in the Merger Agreement), in the Transaction was fair, from a financial point of view, to such Shareholders. For additional information, see the section entitled “The Merger - Opinion of Lincoln International LLC” and Annex B to this proxy statement.

Following the presentations by Ropes & Gray and Lincoln, the Company Board discussed the Final Parent Proposal, including the potential merits and considerations for and against proceeding with the proposed transaction. For additional information, see the section entitled “Recommendation of the Board of Directors and Reasons for the Merger – Reasons for the Merger”. After discussion, the Company Board, among other things, (i) determined that the Merger Agreement and the Merger are fair to, in the best interests of, and are advisable to, the Company and its Shareholders, (ii) adopted the Merger Agreement and duly authorized and approved the execution, delivery and performance of the Merger Agreement by the Company and the consummation of the transactions contemplated by the Merger Agreement upon the terms and subject to the conditions set forth therein, (iii) directed that the Merger Agreement be submitted to the Shareholders for approval at a meeting of the Shareholders and (iv) recommended that, subject to the terms and conditions of the Merger Agreement, the Shareholders approve the Merger Agreement.

Later in the evening of March 8, 2024, the Company and Parent executed the Merger Agreement.

On March 11, 2024, prior to the open of trading on NYSE, the Company issued a press release announcing entry into the Merger Agreement.

Recommendation of the Company Board and Reasons for the Merger

Recommendation of the Company Board

After careful consideration, the Company Board has unanimously (i) determined that the Merger Agreement and the Merger are fair to, in the best interests of, and advisable to, the Company and the holders of Shares; (ii) adopted the Merger Agreement and duly authorized and approved the execution, delivery and performance of the Merger Agreement by the Company and the consummation of the transactions contemplated by the Merger Agreement upon the terms and subject to the conditions set forth therein; (iii) directed that the Merger Agreement be submitted to the holders of Shares for approval at a meeting of the Company’s shareholders; and (iv) resolved to recommend that, subject to the terms and conditions of the Merger Agreement, the holders of Shares approve the Merger Proposal.

Accordingly, the Company Board recommends, on behalf of the Company, that you vote: (i) “FOR” the Merger Proposal; (2) “FOR” the non-binding, advisory Compensation Proposal; and (ii) “FOR” the Adjournment Proposal, if necessary or appropriate.

Reasons for the Merger

The Company Board considered the following reasons (which are not listed in any relative order of importance), all of which the Company Board viewed as generally supporting (i) its determination that the Merger Agreement and the Merger are fair to, in the bests interests of, and advisable to, the Company and its Shareholders, (ii) its adoption of the Merger Agreement and authorization and approval of the execution, delivery and performance of the Merger Agreement by the Company and the consummation of the transactions contemplated by the Merger Agreement upon the terms and subject to the conditions set forth therein, (iii) its direction that the Merger Agreement be submitted to the Shareholders for approval at a meeting of the Shareholders and (iv) its recommendation that, subject to the terms and conditions of the Merger Agreement, the Shareholders approve the Merger Agreement:

In addition, between July 1, 2018 and June 30, 2023 (the end of the Company’s 2023 fiscal year), the Company’s stock price had ranged from $2.51 and $13.90;

The Company Board also considered a number of uncertainties, risks, and other factors concerning the Company’s business and the Merger that it generally viewed as weighing against approving the Merger, including the following (which are not listed in any relative order of importance):

The foregoing discussion addresses the reasons considered by the Company Board in consideration of its recommendation that, subject to the terms and conditions of the Merger Agreement, the Shareholders approve the Merger Agreement. In view of the wide variety of reasons considered by the Company Board in connection with its evaluation of the Merger and the complexity of these matters, the Company Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific reasons considered in reaching its determination and recommendation. Rather, in considering the information and reasons described above, individual members of the Company Board each applied his or her own personal business judgment to the process and may have given differing weights to differing factors. The Company Board based its recommendation on the totality of the information presented. The explanation of the Company Board’s reasoning set forth above contains forward-looking statements that should be read in conjunction with the section of this proxy statement entitled “Forward-Looking Statements.”

Opinion of Lincoln International LLC

Summary of Opinion

On March 8, 2024, Lincoln rendered its oral opinion to the Company Board (which was subsequently confirmed in writing) to the effect that, as of such date and subject to and based on the procedures followed, assumptions made, qualifications, conditions and limitations on the review undertaken and other matters considered by Lincoln as set forth in its written opinion (the “Opinion”), the Merger Consideration (as defined in the Merger Agreement) to be received by Shareholders, other than any Shares described in Section 2.1(b) of the Merger Agreement and any Dissenting Shares (as defined in the Merger Agreement), in the Merger was fair, from a financial point of view, to such Shareholders.

The Opinion was directed to the Company Board (in its capacity as such) and only addressed the fairness, from a financial point of view, of the Merger Consideration to be received by Shareholders in the Merger, and did not address any other terms, aspects or implications of the Merger, or any agreements, arrangements or understandings entered into in connection with the Merger. The summary of the 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 which describes the procedures followed, assumptions made, qualifications, conditions and limitations on the review undertaken and other matters considered by Lincoln in connection with the preparation of the Opinion. The analysis performed by Lincoln should be viewed in its entirety; none of the methods of analysis should be viewed in isolation. The Opinion was directed to the Company Board for its use and benefit in evaluating the fairness of the Merger Consideration to be received by Shareholders (other than any Shares described in Section 2.1(b) of the Merger Agreement or any Dissenting Shares) pursuant to the Merger Agreement and relates only to the fairness, as of the date of the Opinion. The Opinion does not address any other aspect of the Merger or any related transaction and neither the 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 Company Board, the Company or any Shareholder as to how to act or vote on any matter relating to the Merger or otherwise.

In connection with rendering the Opinion, Lincoln, among other things:

In performing its analyses and rendering the Opinion with respect to the Merger, Lincoln has, with the Company Board’s and the Company’s consent:

The Opinion was prepared as of the date thereof and was necessarily based on financial, economic, market and other conditions as they existed on and the information made available to Lincoln as of the date thereof. Although subsequent developments may affect the Opinion, Lincoln does not have any obligation to update, revise or reaffirm the Opinion.

Lincoln did not evaluate the Company’s solvency and was not requested to make, and did not make, an independent evaluation or appraisal of the assets or liabilities (contingent, derivative, off-balance sheet or otherwise) of the Company or any of its subsidiaries, nor was Lincoln furnished with any such evaluations or appraisals.

The Opinion (i) did not address the underlying business decision of the Company Board, the Company or any other party to proceed with or effect the Merger or the relative merits of the Merger as compared to other transaction structures, transactions or business strategies that may be available to the Company or the effect of any other transaction in which the Company might engage, and did not address whether the Merger Consideration to be received is the best possibly attainable under the circumstances (instead, it merely stated whether the Merger Consideration to be received by Shareholders in the Merger is within a range suggested by certain financial analyses), (ii) did not address or constitute a recommendation regarding the decision of the Company or the Company Board to authorize the execution of any agreements relating to the Merger, or to engage in the Merger, (iii) did not constitute advice or a recommendation to the Company Board or any Shareholder as to how they should act or vote with respect to any matter relating to the Merger or otherwise, or whether to proceed with the Merger or any related transaction, (iv) did not address the tax or legal consequences of the Merger to the Company, Shareholders, or any other party, (v) did not address the solvency, creditworthiness or fair value of any member of the Company, the Company or any other participant in the Merger under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, and (vi) only addressed the fairness from a financial point of view of the Merger Consideration to be received by Shareholders in the Merger and did not address any other terms, aspects or implications of the Merger, or any agreements, arrangements or understandings entered into in connection with the Merger or otherwise. Lincoln expressed no opinion as to the fairness of any portion or aspect of the Merger to (i) the holders of any class of securities, other than the Shares, creditors or other constituencies of the Company, or any other party, or (ii) any one class or group of Shareholders, creditors or other constituencies vis-à-vis any other class or group of Shareholders, creditors or other constituents (including, without limitation, the allocation of any Merger Consideration among or within such classes or groups of Shareholders, creditors or other constituents). The decision as to whether to proceed with the Merger or any related transaction depends on an assessment of various factors, many of which are unrelated to the financial analyses on which the Opinion is based.

Lincoln expressed no opinion as to what the market price or value of the stock of the Company would be after the announcement of the Merger. The Opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s credit worthiness, as tax advice, or as accounting advice. Lincoln also expressed no opinion about the amount or nature of any compensation or equity arrangement to be given to the Company’s officers, directors or employees, or any class of such persons, in connection with the Merger relative to the Merger Consideration in the Merger, or with respect to the fairness of any such compensation. Lincoln did not make, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.

It is understood that the Opinion is solely for the use and benefit of the Company Board in connection with the Merger. The Opinion may not be used or relied on by any other person or for any other purpose and is not intended to and does not confer any rights or remedies upon any other person. Lincoln has consented to the inclusion of its opinion in its entirety and the description thereof in this proxy statement. The Opinion does not create any fiduciary duty on the part of Lincoln to the Company, the Company Board, the Shareholders or any other party.

Set forth below is a summary of the material financial analyses reviewed by Lincoln with the Company Board on March 8, 2024 in connection with rendering the Opinion. The following summary, however, does not purport to be a complete description of the financial analyses performed by Lincoln. The order of the financial analyses described, and the results of these analyses, do not represent relative importance or weight given to these analyses by Lincoln. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before March 7, 2024 and is not necessarily indicative of then-current market conditions.

The following summary of Lincoln’s financial analyses includes information presented in tabular format. Several financial analyses were employed and no one method of analysis should be regarded as critical to the overall conclusion reached. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. Each of the analyses conducted was carried out to provide a particular perspective of the Merger Consideration. In order to fully understand the analyses, the tables must be read together with the full text of each summary. The tables are not intended to stand alone and alone do not constitute complete analyses. Considering the tables below without considering the full narrative description of Lincoln’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses.

While this summary describes certain of the analyses and factors that Lincoln deemed material in its presentation to the Company Board, it is not a comprehensive description of all analyses and factors considered by Lincoln. The preparation of a fairness opinion is a complex process that involves various determinations as to appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description.

Lincoln did not form a conclusion as to whether any individual analysis, when considered in isolation, supported or failed to support its opinion as to the fairness, from a financial point of view, of the Merger Consideration. Accordingly, Lincoln believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it in rendering the Opinion without considering all analyses and factors could create a misleading or incomplete view of the evaluation process underlying the Opinion. Lincoln did not place any specific reliance on any individual analysis, but instead concluded that its analyses, taken as a whole, supported the Opinion.

Summary of Lincoln’s Financial Analysis

Discounted Cash Flow Analysis

Lincoln performed a discounted cash flow analysis of the Company. A discounted cash flow analysis is a valuation methodology used to derive an intrinsic valuation of a company by calculating the present value of its estimated future cash flows. For purposes of its discounted cash flow analysis, Lincoln utilized and relied upon Management’s Projections, which provided a financial forecast for the fiscal years 2024 through 2026. Lincoln performed a discounted cash flow analysis of the projected unlevered free cash flows of the Company of approximately $10.0 million for the 6-months ending fiscal year 2024, approximately $8.0 million for fiscal year 2025, and approximately $14.0 million for fiscal year 2026, based on the forecasted unlevered after-tax net operating profits, utilizing a 30% tax rate, adjusted for non-cash charges, working capital investments, and capital expenditures as provided for in Management’s Projections. For further information regarding Management’s Projections, see “Certain Unaudited Prospective Financial Information.” Lincoln calculated the present value of the projected unlevered free cash flows utilizing an estimate of the Company’s weighted average cost of capital for the discount rate. In calculating the net present value of the unlevered free cash flows in the discounted cash flow analysis, Lincoln utilized a weighted average cost of capital range of 15.50% to 17.50%. The discount rate range was selected giving consideration to market-based and company-specific risks and was based on Lincoln’s professional judgment and experience. Lincoln calculated the Company’s terminal value range of approximately $110.0 million to approximately $140.0 million using the Gordon Growth perpetuity formula by applying an assumed perpetuity growth rate range of 2.0% to 3.0% to the Company’s terminal year unlevered free cash flows of approximately $17.0 million, normalizing depreciation for 95.0% of capital expenditures and working capital investments for the midpoint of the range of perpetuity growth rates. Lincoln discounted the indicated terminal value to present value using the selected range of discount rates and added the present value of the unlevered free cash flows and the present value of certain tax benefits of approximately $7.0 million based on the tax savings from intangible asset amortization and net operating carryforward losses as provided for in the schedule provided by Management (the “Tax Benefits”). Based on these assumptions, and after rounding, Lincoln’s discounted cash flow analysis indicated an estimated enterprise value range for the Company, including the Tax Benefits, of approximately $120.0 million to approximately $145.0 million. Lincoln then calculated an estimated equity value range for the Company of approximately $110.0 million to approximately $135.0 million by adding the amount of the Company’s cash and cash equivalents, subtracting the amount of the Company’s debt and debt-like items, and adjusting for the Company’s pension liability, net of tax benefits, each as of December 31, 2023. The resulting estimated equity value range of approximately $110.0 million to approximately $135.0 million was then divided by the number of fully diluted Shares outstanding of approximately 7.7 million as of March 4, 2024, as provided by Management, to derive a range of equity values per share of $14.31 to $17.56, as compared to the Merger Consideration of $16.19 per Share in the Merger.

Selected Public Companies Analysis

Lincoln performed a selected public companies analysis for the Company. Lincoln screened for comparable companies traded on all major stock exchanges, operating in similar geographies as the Company, and within the industrial machinery and supplies and components industry classification category. Lincoln further refined the selected public companies by narrowing its selection to those companies with the most similar end-markets and product offerings in the specialty hand tools industry to the Company, while also excluding those companies with limited trading volume or limited equity research analyst coverage. Although none of the selected public companies is directly comparable to the Company, Lincoln selected the public companies for its analysis based on their degree of similarity to the Company, primarily in terms of operations, geographic footprint, size, and historical and projected financial performance as compared to the Company. Lincoln analyzed the selected public companies listed below:

The table below summarizes observed historical multiples of enterprise value to LTM revenue and LTM EBITDA, in each case as of March 7, 2024.

The results of this analysis were as follows:

Selected Public Companies Analysis

None of the selected public companies was identical to the Company. As a result, a complete valuation analysis cannot be limited to a quantitative review of the selected public companies, but also requires complex consideration and judgments concerning differences in financial and operating characteristics of such companies, as well as other factors that could affect their value relative to that of the Company.

To determine a range of implied enterprise values for the Company, Lincoln multiplied its selected range of enterprise value to last 12 months (“LTM”) earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples of 5.5x to 7.0x, by the Company’s LTM EBITDA and added the present value of the Tax Benefits.

Based on the selected range, and after rounding, Lincoln’s selected public companies indicated an estimated enterprise value range for the Company, including the Tax Benefits, of approximately $118.0 million to approximately $148.0 million. Lincoln then calculated an estimated equity value range of approximately $108.0 million to approximately $138.0 million for the Company by adding the amount of the Company’s cash and cash equivalents, subtracting the amount of the Company’s debt and debt-like items, and adjusting for the Company’s pension liability, net of tax benefits, each as of December 31, 2023. The resulting estimated equity value range was then divided by the number of fully diluted Shares outstanding of approximately 7.7 million as of March 4, 2024, as provided by Management, to derive a range of equity values per share of $14.05 to $17.95, as compared to the Merger Consideration in the Merger.

Valuation multiples were selected by Lincoln, in part, by taking into consideration historical and projected financial performance metrics of the Company relative to such metrics of the selected public companies, including, but not limited to, the size of the Company on a revenue and EBITDA basis, historical, estimated and projected EBITDA margins compared to the selected public companies, and historical, estimated and projected revenue and EBITDA growth compared to the selected public companies.

Selected M&A Transactions Analysis

Lincoln reviewed publicly available information related to selected mergers and acquisitions transactions listed in the table below but did not rely upon the M&A Transactions Analysis due to a limited data set of publicly announced transactions that it deemed relevant. Lincoln’s screening criteria focused on similar factors and characteristics as those criteria utilized for the selected public companies with a focus on those with hand tool businesses. Lincoln’s screening criteria identified additional announced transactions that were ultimately excluded due to the lack of publicly disclosed information. The selection of these M&A transactions was based on, among other things, the target company’s industry and operational similarity, the relative size of the transaction, and the availability of public information related to the selected transaction.

Selected M&A Transactions Analysis

The LTM revenue and LTM EBITDA multiples for the selected target companies were calculated based on certain publicly available historical financial data for the selected M&A transactions. No company or transaction utilized in the selected M&A Transactions Analysis was identical or directly comparable to the Company or the Merger.

Miscellaneous

Lincoln and its affiliates provide a range of investment banking and financial services and, in that regard, Lincoln and its affiliates have provided, are currently providing, and may in the future provide investment banking and other financial services to the Company, Parent, or each of their respective affiliates, for which Lincoln and its affiliates would expect to receive compensation. Lincoln was engaged by the Company on November 20, 2023 to render an opinion to the Company Board as to whether the Merger Consideration to be received by Shareholders, other than any Shares described in Section 2.1(b) of the Merger Agreement and any Dissenting Shares (as defined in the Merger Agreement), in connection with the Merger was fair, from a financial point of view, to such Company shareholders. Lincoln received fees for its services of approximately $300,000, of which a portion was payable at the time Lincoln was engaged by the Company, and the remainder of which became payable upon Lincoln informing the Company Board that it was prepared to deliver its opinion as requested, which are in addition to any payments due to Lincoln under the terms of the M&A Engagement Letter (as defined below). No portion of Lincoln’s fee in connection with the delivery of its opinion is contingent upon either the conclusion reached in its opinion or the consummation of the Merger. Pursuant to the engagement letter between Lincoln and the Company, the Company agreed to customary expense reimbursement and indemnification provisions. In the two years immediately prior to delivering the Opinion, Lincoln was (i) engaged on April 17, 2023 to act as lead financial advisor to the Company in connection with a potential transaction (the “M&A Engagement Letter”) and (ii) Lincoln had been engaged to provide financial advisory services to affiliates and portfolio companies of MiddleGround Capital LLC (“MiddleGround” and such engagements the “MiddleGround Engagements”). Lincoln will receive a customary fee of approximately $2.25 million from the Company for our services under the M&A Engagement Letter, a portion of which has been paid, and a significant portion of which is contingent upon the successful completion of the Merger; such fee under the M&A Engagement Letter is separate from, and in addition to, the fee being paid to Lincoln for delivery of its opinion. Lincoln will or has received a customary fee for our services, reimbursement for certain expenses, and indemnification against certain liabilities in connection with the MiddleGround Engagements. Fees attributable to Lincoln’s active engagement with a company in which MiddleGround is a shareholder is indeterminable as the engagement is ongoing and the outcome is unknown. The potential fees received will not be material to the overall financial results of Lincoln.

Certain Unaudited Prospective Financial Information

The Company does not, as a matter of course, make public projections as to the Company’s future financial performance, due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. In connection with the Company’s strategic planning process and the Company Board’s evaluation of the Merger, as described further in the section of this proxy statement captioned “The Merger—Background of the Merger,” the Company’s management team prepared and reviewed with the Company Board Management’s Projections. The Company Board approved Management’s Projections, authorized the use of Management’s Projections by Lincoln, the Company’s financial advisor, for the purposes of Lincoln’s financial analyses and in preparing any fairness opinion in connection with the Merger (as described in more detail in the section of this proxy statement captioned “The Merger—Opinion of Lincoln International LLC”), authorized the Company’s management team to take any further steps that might be necessary to carry out that intent, and provided Management’s Projections to Parent.

Management’s Projections were prepared for internal use only and not for public disclosure and was provided to the Company Board for the purposes of considering, analyzing and evaluating the Merger.

The following tables present a summary of Management’s Projections.

¹ Estimated annual tax savings from net operating carryforward losses and intangible amortization.

Important Information Regarding Management’s Projections

Management’s Projections were developed based on the Company’s management team’s knowledge of and assumptions with respect to the Company’s business, including the Company’s in-home evaluation products and services. Management’s Projections were developed without giving effect to the Merger, including any impact of the negotiation or execution of the Merger Agreement or the Merger, the expenses that have already or may be incurred in connection with completing the Merger or any changes to the Company’s operations or strategy that may be implemented during the pendency of or following the consummation of the Merger. Management’s Projections also do not consider the effect of any failure of the Merger to be completed; it should not be viewed as accurate or continuing in that context.

Management’s Projections were not prepared with a view toward public disclosure or complying with accounting principles generally accepted in the United States (which we refer to as “GAAP”). In addition, Management’s Projections were not prepared with a view toward complying with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. Neither the Company’s independent registered public accounting firm nor any other independent accountants have (i) compiled, reviewed, audited, examined or performed any procedures with respect to Management’s Projections, (ii) expressed any opinion or any other form of assurance on such information or the achievability of Management’s Projections or (iii) assumed any responsibility for Management’s Projections.

Because Management’s Projections reflect estimates and judgments, it is susceptible to sensitivities and assumptions, as well as multiple interpretations based on actual experience and business developments. Management’s Projections also cover multiple years, and such information by its nature becomes less predictive with each succeeding year. Management’s Projections are not, and should not be considered to be, a guarantee of future operating results. Further, Management’s Projections are not fact and should not be relied upon as being necessarily indicative of the Company’s future results.

Although Management’s Projections are presented with numerical specificity, they reflect numerous assumptions and estimates as to future events. Management’s Projections reflect assumptions and uncertainties that are subject to change. Important factors that may affect actual results and cause Management’s Projections not to be achieved are described in various risk factors described in the sections of this proxy statement captioned “Cautionary Statement Regarding Forward-Looking Statements,” and in the Company’s other filings with the SEC, including those listed under the section captioned “Where You Can Find More Information.” All of these factors are difficult to predict, and many of them are outside of the Company’s control. As a result, there can be no assurance that Management’s Projections will be realized, and actual results may be materially better or worse than those contained in Management’s Projections, whether or not the Merger is consummated. Management’s Projections also reflect assumptions as to certain business decisions that are subject to change. Management’s Projections may differ from publicized analyst estimates and forecasts and does not consider any events or circumstances after the date that it was prepared, including the announcement of the entry into the Merger Agreement. Management’s Projections have not been updated or revised to reflect information or results after the date it was prepared or as of the date of this proxy statement. Except to the extent required by applicable federal securities laws, the Company does not intend to update or otherwise revise Management’s Projections to reflect circumstances existing after the date that such information was prepared or to reflect the occurrence of future events. The Company has or may report results of operations for periods included in Management’s Projections that were or will be completed following the preparation of Management’s Projections. Shareholders and investors are urged to refer to the Company’s periodic filings with the SEC for information on the Company’s actual historical results.

Certain of the financial measures included in Management’s Projections are “non-GAAP financial measures,” including EBITDA, Adjusted EBITDA and unlevered free cash flow. These are financial performance measures that are not calculated in accordance with GAAP. These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. In certain circumstances, including those applicable to Management’s Projections, financial measures included in forecasts provided to a financial advisor and a board of directors in connection with a business combination transaction are excluded from the definition of “non-GAAP financial measures” under applicable SEC rules and regulations. As a result, Management’s Projections 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. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the Company Board or Lincoln. Accordingly, no reconciliation of the financial measures included in Management’s Projections is provided in this proxy statement.

Management’s Projections constitute forward-looking statements. By including Management’s Projections in this proxy statement, neither the Company nor any of its representatives has made or makes any representation to any person regarding the Company’s ultimate performance as compared to the information contained in Management’s Projections. The inclusion of Management’s Projections should not be regarded as an indication that the Company Board, the Company or any other person considered, or now considers, Management’s Projections to be predictive of actual future results. Further, the inclusion of Management’s Projections in this proxy statement does not constitute an admission or representation by the Company that the information presented is material. Management’s Projections are included in this proxy statement solely to give the Shareholders access to the information that was provided to the Company Board and Lincoln. Management’s Projections are not included in this proxy statement in order to influence any Shareholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal rights with respect to their shares.

Interests of Starrett’s Directors and Executive Officers in the Merger

In considering the recommendation of the Company Board that the Shareholders should vote to approve the Merger Proposal, the Shareholders should be aware that the executive officers and directors of Starrett have certain interests in the Merger that may be different from, or in addition to, the interests of the Shareholders generally, including those items listed below. The Company Board was aware of and considered these interests, among other matters, in evaluating and overseeing the negotiation of the Merger Agreement, in adopting the Merger Agreement, and in recommending that the Merger Proposal be approved by Shareholders. As described in more detail below, these interests may include, for one or more of our directors and executive officers:

Treatment of Shares and Company Equity Awards

Treatment of Company Shares

If the Merger is consummated, any Shares held of record or beneficially owned by a director or executive officer will be converted into the right to receive the Merger Consideration at the Effective Time.

The approximate value of the cash payments that each director and executive officer of the Company would receive in exchange for his or her Shares is set forth in the table below. The information is based on the number of Shares held by the Company’s directors and executive officers as of April 11, 2024.

Treatment of Company RSUs and Company PSUs

At or immediately prior to the Effective Time, each Company RSU that is outstanding immediately prior to the Effective Time, whether vested or unvested, will be canceled and converted into the right to receive an amount in cash, without interest (less applicable tax withholdings), equal to (i) the number of Shares subject to such Company RSU immediately prior to the Effective Time, with any remaining service-based vesting requirements deemed fully satisfied, multiplied by (ii) the Merger Consideration.

At or immediately prior to the Effective Time, each Company PSU that is outstanding immediately prior to the Effective Time, whether vested or unvested, will be canceled and converted into the right to receive an amount in cash, without interest (less applicable tax withholdings), equal to (i) the number of Shares subject to such Company PSU immediately prior to the Effective Time assuming full satisfaction of the performance-based vesting conditions at maximum levels and with any remaining service-based vesting requirements deemed fully satisfied, multiplied by (ii) the Merger Consideration.

The table below sets forth the number of Company RSUs and Company PSUs held by directors and officers as of April 11, 2024, and the aggregate cash consideration (on a pre-tax basis) that would be payable with respect to such Company RSUs and Company PSUs. The actual amount payable in respect of Company RSUs and Company PSUs will depend on the number of Shares subject to Company RSUs and Company PSUs held by such persons as of the Effective Time, which may differ from the amounts in the table below.

Treatment of the Company ESPPs

The Company sponsors the Company ESPPs in which executive officers and other employees are eligible to participate. Pursuant to the terms of the Merger Agreement, the compensation committee of the Company Board adopted resolutions and took actions with respect to the Company ESPPs that are necessary to provide that: (i) with respect to any offering period in effect under any Company ESPP as of the date the Merger Agreement was entered into, no individual who was not a participant in the respective Company ESPP as of the date the Merger Agreement was entered into may enroll in a Company ESPP with respect to such offering period and no participant may increase the percentage amount of his or her payroll deduction election from that in effect on the date the Merger Agreement was entered into for such offering period; (ii) no offering period shall commence following the date the Merger Agreement was entered into unless and until the Merger Agreement is terminated; (iii) if the applicable purchase date with respect to the offering period would otherwise occur on or after the Effective Time, then the offering period will be shortened and the applicable purchase date with respect to the offering period will occur at least two (2) business days preceding the date on which the Effective Time occurs; and (iv) the Company ESPPs shall terminate as of or prior to the Effective Time. The value of the discount applicable to all eligible executive officers who participate in the Company ESPPs will be based on the difference between the Merger Consideration of $16.19 per Share and the discounted purchase price per share under the ESPPs for the current purchase periods under the ESPPs.

Potential Payments upon Termination or Change in Control

Each executive officer of Starrett is party to an Amended and Restated Change in Control Agreement (as amended, the “CIC Agreements”), which provide for certain payments and benefits in connection with a change in control or in connection with specified termination events. The terms “cause,” “good reason,” and “change in control” referred to below are defined in the executive officer’s respective CIC Agreement. The Merger will constitute a change in control of Starrett for purposes of the CIC Agreements.

CIC Agreement with Douglas A. Starrett

Under Mr. Starrett’s CIC Agreement, Mr. Starrett is entitled to certain payments and benefits if there is a change in control of the Company. In the event of a change in control of the Company (and notwithstanding any change in employment with the Company), Mr. Starrett is entitled to:

CIC Agreements with other Executive Officers

Under his applicable CIC Agreement, each of Messrs. Tripp, Arntsen, and Allen is entitled to certain payments and benefits if (1) there is a change in control of the Company and (2) his employment is terminated by the Company without cause or by the executive officer for good reason, in each case, within twenty-four (24) months following the change in control. In the event of such a termination of employment, the executive officer is entitled to:

Further, in the event of a change in control of the Company (and notwithstanding any change in employment with the Company), each of Messrs. Tripp, Arntsen, and Allen is entitled to:

2024 Annual Bonus Payments

To the extent not paid prior to the Closing Date, immediately prior to the Effective Time, the Company will pay annual bonuses with respect to fiscal year 2024 to employees, including executive officers, at the greater of target or actual achievement of the applicable performance goals, pro-rated for the portion of the fiscal year that has elapsed as of the Closing Date.

Employment Agreements and Retention Arrangements Through and Following the Merger

As of the date of this proxy statement, Parent has informed the Company that none of the Company’s executive officers has entered into any new agreement, arrangement or understanding with Parent or its affiliates regarding employment with the Surviving Corporation. Although it is possible that Parent or the Surviving Corporation may enter into employment agreements or other employment or consultancy arrangements with the Company’s executive officers, as of the date of this proxy statement, there can be no assurance that any parties will reach an agreement.

Insurance and Indemnification of Directors and Executive Officers

The Merger Agreement provides that Parent and Merger Sub will cause the articles of organization and bylaws of the Surviving Corporation to contain provisions no less favorable with respect to indemnification, advancement of expenses, and exculpation from liabilities of present and former directors, officers, and employees of the Company than such provisions set forth in the articles of incorporation and bylaws of the Company as of the date of the Merger Agreement. Such provisions may not be amended, repealed, or otherwise modified in any manner that would adversely affect the rights thereunder of such individuals, and will be observed by the Surviving Corporation and its subsidiaries to the fullest extent available under Massachusetts (or other applicable) law until the later of (i) the expiration of the statute of limitations applicable to such matters and (ii) six (6) years from the Effective Time.

In addition, the Merger Agreement provides for indemnification and exculpation rights with respect to liabilities for acts and omissions occurring prior to or at the Effective Time, as well as related rights to advancement of expenses, in favor of the current and former directors and officers of the Company (together with such person’s heirs, executors and administrators), who we refer to collectively as the “indemnitees.” Specifically, from and after the Effective Time, and until the later of (i) the expiration of the statute of limitations applicable to such matters and (ii) six (6) years from the Effective Time, Parent and the Surviving Corporation will, jointly and severally, indemnify and hold harmless each current or former director and officer of the Company against all obligations to pay a judgment, settlement, or penalty and reasonable and documented out-of-pocket expenses incurred in connection with any action, whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal, arising out of or pertaining to any action or omission, including any action or omission in connection with the fact that the indemnitee is or was an officer, director, employee, fiduciary, or agent of the Company or its subsidiaries, or of another entity if such service was at the request of the Company, whether asserted or claimed prior to, at, or after the Effective Time, to the fullest extent permitted under applicable law. The Merger Agreement also provides that Parent and the Surviving Corporation will advance reasonable fees and expenses (including reasonable attorneys’ fees) as incurred by any such indemnitee in the defense of such legal action (provided that any person to whom expenses are advanced will have provided, to the extent required by the MBCA, an undertaking to repay such advances if it is finally determined that such Person is not entitled to indemnification).

The Merger Agreement further provides that prior to the Effective Time, the Company may purchase a tail policy under the current directors’ and officers’ liability insurance policies maintained at such time by the Company, which tail policy (i) will be effective until the sixth (6th) anniversary of the Effective Time with respect to claims arising from facts or events that existed or occurred prior to or at the Effective Time and (ii) will contain coverage that is at least as protective to such directors and officers as the coverage provided by such existing policies; provided, that the annual premium for such tail policy may not be in excess of three hundred percent (300%) of the last annual premium paid prior to the Effective Time (the “Maximum Amount”). In addition, without limiting the foregoing, unless the Company has purchased a tail policy, the Merger Agreement requires the Surviving Corporation to purchase such tail policy at or after the Effective Time. Parent will cause the Surviving Corporation to maintain such policy in full force and effect for the full six (6)-year term, and cause all obligations thereunder to be honored by the Surviving Corporation; provided, that neither Parent nor the Surviving Corporation shall be required to pay an aggregate premium for such insurance policies in excess of the Maximum Amount; provided, further, that if the aggregate premium of such insurance coverage exceeds such amount, the Surviving Corporation shall be obligated to obtain the maximum amount of coverage available for the Maximum Amount.

Golden Parachute Compensation

The following table sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation for the Company’s named executive officers (“NEOs”) that is based on or otherwise relates to the Merger. The amounts set forth in the table are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement and the footnotes to the table. As a result, the actual amounts, if any, that an NEO receives may materially differ from the amounts set forth in the table.

The table below assumes that (1) the Merger was consummated on April 11, 2024, (2) the NEO’s employment was terminated by the Company without cause or the NEO resigned for good reason on the same day in a manner entitling the NEO to receive severance payments and benefits under his respective CIC Agreement, (3) the NEO’s base salary rates and target annual bonus remain unchanged from those in place as of April 11, 2024, (4) no NEO receives any additional equity grants on or prior to the Effective Time, and (5) no NEO enters into any new agreement with the Company or is otherwise legally entitled to, prior to the Effective Time, additional compensation or benefits. The calculation in the table below does not include amounts under contracts, agreements, plans or arrangements to the extent they do not discriminate in scope, terms, or operation in favor of the NEOs and that are available generally to all of the Company’s salaried employees.

Appraisal Rights

Under Massachusetts law, a shareholder of a Massachusetts corporation may be entitled to appraisal rights, and payment of the fair value of his, her, or its shares, in the event of a merger, but such rights do not always apply. Fair value for these purposes means the value of the shares immediately before the Effective Time, excluding any element of value arising from the expectation or accomplishment of the Merger unless such exclusion would be inequitable.

Section 13.02(a)(1) of the MBCA provides, among other things, that shareholders are not entitled to appraisal rights in a merger in which shareholders already holding marketable securities receive cash in the merger, and no director, officer or controlling shareholder has a direct or indirect material financial interest in the merger other than in his capacity as (i) a shareholder of the corporation, (ii) a director, officer, employee or consultant of either the merging or the surviving corporation or of any affiliate of the surviving corporation if her or his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than 5% of the voting shares of all classes and series of the corporation’s equity in the aggregate. As of the date of this proxy statement, this provision has not been the subject of judicial interpretation and the applicability of the exception ultimately involves complex factual determinations. Starrett reserves the right to contest the availability of appraisal rights and the validity of any purported demand for appraisal in connection with the Merger and to assert the applicability of the foregoing exception. Starrett also reserves the right to raise such additional arguments, if any, that it may have in opposition to appraisal.

Any Shareholder who believes that he, she, or it is entitled to appraisal rights and who wishes to preserve his, her, or its appraisal rights should carefully review Part 13 of the MBCA (the “Appraisal Statute”), attached as Annex C to this proxy statement, which sets forth the procedures to be complied with in perfecting any such rights. Failure to strictly comply with the procedures specified in the Appraisal Statute would result in the loss of any appraisal rights to which such Shareholder may otherwise be entitled.

Overview of Appraisal Rights

Appraisal rights offer Shareholders the ability to demand payment of the fair value of their Shares in the event they are dissatisfied with the consideration that they are to receive in connection with the Merger. Shareholders who perfect any appraisal rights that they may have and follow certain procedures in the manner prescribed by the Appraisal Statute may be entitled to have their Shares converted into the right to receive from Starrett such cash consideration as may be determined to be due pursuant to the Appraisal Statute.

Only a holder of record of Shares (or a beneficial holder of such Shares acting with the written consent of the holder of record) may exercise appraisal rights, and if a holder exercises appraisal rights, he, she, or it must exercise such rights with respect to all Shares owned by such holder. The following discussion is not a complete statement of the law pertaining to appraisal rights under the Appraisal Statute and is qualified in its entirety by the full text of the Appraisal Statute, which is attached to this proxy statement as Annex C. Please read the Appraisal Statute carefully, because exercising appraisal rights involves several procedural steps, and failure to follow appraisal procedures could result in the loss of such rights. Shareholders should consult with their advisors, including legal counsel, in connection with any demand for appraisal.

Shareholders who perfect their rights to appraisal in accordance with the Appraisal Statute and do not thereafter withdraw their demands for appraisal or otherwise lose their appraisal rights, in each case in accordance with the Appraisal Statute, will be entitled to appraisal rights and to obtain payment of the fair value of their Shares, together with interest. Shareholders should be aware that the fair value of their Shares as determined pursuant to the Appraisal Statute could be more than, the same as or less than the Merger Consideration.

Notice of Shareholder Intent to Demand Payment

A Shareholder who wishes to assert appraisal rights must deliver written notice of such Shareholder’s intent to demand payment to Starrett’s principal offices at the following address and must not vote, or cause or permit to be voted, his, her or its Shares for the Merger Proposal:

The L.S. Starrett Company
121 Crescent Street
Athol, MA 01331

If Starrett does not receive a Shareholder’s written notice of intent to demand payment prior to the vote at the Special Meeting or if such Shareholder votes, or causes or permits to be voted, his, her or its Shares in favor of the Merger Proposal, such Shareholder will not be entitled to appraisal rights under the provisions of the MBCA and will instead only be entitled to receive the Merger Consideration. The submission of a proxy card voting “against” or “abstaining” on the Merger Proposal will not constitute sufficient notice of a Shareholder’s intent to demand payment to satisfy Part 13 of the MBCA. A Shareholder’s written notice is effective on the earliest of (i) receipt by Starrett, (ii) five (5) days after it was deposited in the United States mail (postpaid and correctly addressed) to Starrett, or (iii) the date shown on a return receipt, if sent by registered or certified mail, return receipt requested or, if sent by messenger or delivery service, the date shown on the return receipt signed by or on behalf of Starrett.

Appraisal Notice and Form

If the Merger is completed, within ten (10) days after the Effective Date of the Merger, Starrett must deliver a written appraisal notice (the “Appraisal Notice”) and a form containing certain information (the “Shareholder Certification Form”) to all Shareholders who have properly provided notice of intent to demand payment and did not vote, or cause or permit to be voted, his, her or its Shares for the Merger Proposal. The Appraisal Notice must be accompanied by a copy of the Appraisal Statute and the Shareholder Certification Form, which will specify the date of the first announcement to Shareholders of the principal terms of the Merger (i.e., March 11, 2024) (the “Merger Announcement Date”). The Appraisal Notice must state:

Perfection of Rights; Right to Withdraw

The Shareholder Certification Form requires that a Shareholder intending to demand appraisal rights certify: (i) whether or not beneficial ownership of those Shares for which appraisal rights are asserted was acquired before the Merger Announcement Date, and (ii) that the Shareholder did not vote for the Merger Proposal. If the Shareholder does not return the completed form by the Shareholder Certification Form Deadline, he, she, or it will be deemed to have accepted payment of the Merger Consideration in full satisfaction of Starrett’s obligations under the Appraisal Statute. A Shareholder who wishes to exercise appraisal rights must certify on the Shareholder Certification Form whether the beneficial owner of the Shares acquired beneficial ownership before the Merger Announcement Date. If a Shareholder fails to make this certification, Starrett may elect to treat the Shareholder’s Shares as After-Acquired Shares (as defined and discussed below). In addition, a Shareholder who wishes to exercise appraisal rights must execute and return the Shareholder Certification Form and, in the case of certificated Shares, deposit the certificates in accordance with the terms of the Appraisal Notice. Once a Shareholder deposits his, her or its certificates or, in the case of uncertificated Shares, returns the executed Shareholder Certification Form, the Shareholder loses all rights as a Shareholder unless the Shareholder withdraws from the appraisal process by notifying Starrett in writing by the Withdrawal Deadline. A Shareholder who does not withdraw from the appraisal process by the Withdrawal Deadline may not later withdraw without Starrett’s written consent. A Shareholder who does not execute and return the Shareholder Certification Form and deposit the Share certificates by the Shareholder Certification Form Deadline or the Certificate Deposit Deadline, respectively, is not entitled to payment under the Appraisal Statute.

Assertion of Rights by Nominees and Beneficial Owners

A record Shareholder may assert appraisal rights as to fewer than all the Shares registered in his, her or its name but owned by a beneficial Shareholder only if the record Shareholder objects with respect to all Shares owned by the beneficial Shareholder and notifies Starrett in writing of the name and address of each beneficial Shareholder on whose behalf appraisal rights are being asserted. The rights of a record Shareholder who asserts appraisal rights for only part of the Shares held of record in the record Shareholder’s name shall be determined as if the Shares as to which the record Shareholder objects and the record Shareholder’s other Shares were registered in the names of different record Shareholders. A beneficial Shareholder may assert appraisal rights as to Shares held on behalf of the Shareholder only if the Shareholder submits to Starrett the record Shareholder’s written consent to the assertion of such rights with respect to all Shares that are beneficially owned by the beneficial Shareholder no later than the Shareholder Certification Form Deadline.

Payment for Shares Acquired Before Merger Announcement Date

Except with respect to After-Acquired Shares, within thirty (30) days after the Shareholder Certification Form Deadline, Starrett must pay in cash to those Shareholders who complied with the procedural requirements for perfecting their appraisal rights the amount Starrett estimates to be the fair value of their Shares, plus interest. The fair value of the Shares is the value of the Shares immediately before the Effective Time, excluding any element of value arising from the expectation or accomplishment of the Merger, unless exclusion would be inequitable. Interest accrues from the Effective Time until the date of payment, at the average rate currently paid by Starrett on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances.

The foregoing payment to each Shareholder must be accompanied by (i) recent financial statements of Starrett, (ii) a statement of Starrett’s estimate of the fair value of the Shares, which estimate must equal or exceed Starrett’s estimate given in the Appraisal Notice, and (iii) a statement that Shareholders who complied with the procedural requirements for perfecting their appraisal rights have the right to demand further payment and that, if the Shareholder does not do so within the applicable time period, such Shareholder will be deemed to have accepted the payment in full satisfaction of Starrett’s obligations under the Appraisal Statute.

A Shareholder who has been paid for his, her or its Shares and is dissatisfied with the amount of the payment must notify Starrett in writing of his, her or its estimate of the fair value of the Shares and demand payment of that estimate plus interest, less the payment already made. A Shareholder who fails to notify Starrett in writing of his, her or its demand to be paid such Shareholder’s stated estimate of the fair value plus interest within thirty (30) days after receiving Starrett’s payment waives the right to demand payment and will be entitled only to the payment made by Starrett based on Starrett’s estimate of the fair value of the Shares.

Offer to Pay for After-Acquired Shares

Starrett may withhold payment from any Shareholder who did not certify that beneficial ownership of all of such Shareholder’s Shares for which appraisal rights are asserted was acquired before the Merger Announcement Date (the “After-Acquired Shares”). If Starrett elects to withhold payment, within thirty (30) days after the Shareholder Certification Form Deadline, it must provide such Shareholders notice of certain information, including recent financial statements of Starrett, Starrett’s estimate of fair value and such Shareholders’ right to accept Starrett’s estimate of fair value, plus interest, in full satisfaction of their demands or to demand appraisal. Those Shareholders who wish to accept Starrett’s offer must notify Starrett of their acceptance within thirty (30) days after receiving the offer. Within ten (10) days after receiving a Shareholder’s acceptance, Starrett must pay in cash the amount it offered in full satisfaction of the accepting Shareholder’s demand.

A Shareholder offered payment who is dissatisfied with that offer must reject the offer and demand payment of his, her or its stated estimate of the fair value of the Shares plus interest. A Shareholder who fails to notify Starrett in writing of his, her or its demand to be paid his, her or its stated estimate of the fair value plus interest within thirty (30) days after receiving Starrett’s offer of payment waives the right to demand payment and will be entitled only to the payment offered by Starrett based on Starrett’s estimate of the fair value of the Shares.

Those Shareholders who do not reject Starrett’s offer in a timely manner, or who otherwise do not satisfy the requirement outlined above for demanding appraisal, will be deemed to have accepted Starrett’s offer, and Starrett must pay to them in cash the amount it offered to pay within forty (40) days after sending the payment offer.

Procedures if Shareholder is Dissatisfied with Payment or Offer

If a Shareholder makes a demand for payment which remains unsettled, Starrett must commence an equitable proceeding in Middlesex County Superior Court, Commonwealth of Massachusetts, within sixty (60) days after receiving the payment demand and petition the court to determine the fair value of the Shares and accrued interest. If Starrett does not commence the proceeding within the sixty (60)-day period, it must pay in cash to each Shareholder the amount the Shareholder demanded plus interest. Starrett must make all Shareholders whose demands remain unsettled parties to the proceeding as an action against their Shares, and all parties must be served with a copy of the petition. Each Shareholder made a party to the proceeding is entitled to judgment: (i) for the amount, if any, by which the court finds the fair value of the Shareholder’s Shares, plus interest, exceeds the amount paid by Starrett to the Shareholder for such Shares or (ii) for the fair value, plus interest, of the Shareholder’s Shares for which Starrett elected to withhold payment.

The jurisdiction of the court in which the proceeding is commenced is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it, and the Shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings.

Court Costs and Counsel Fees

The court in an appraisal proceeding will determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court will assess any costs against Starrett, except that the court may assess costs against all or some of the Shareholders demanding appraisal, in amounts the court finds equitable, to the extent the court finds such Shareholders acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by the Appraisal Statute.

The court in an appraisal proceeding may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable: (i) against Starrett and in favor of any or all Shareholders demanding appraisal if the court finds Starrett did not substantially comply with its requirements under the Appraisal Statute; or (ii) against either Starrett or a Shareholder demanding appraisal, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by the Appraisal Statute.

If the court in an appraisal proceeding finds that the services of counsel for any Shareholder were of substantial benefit to other Shareholders similarly situated, and that the fees for those services should not be assessed against Starrett, the court may award to such counsel reasonable fees to be paid out of the amounts awarded the Shareholders who were benefited. To the extent Starrett fails to make a required payment pursuant to the Appraisal Statute, the Shareholder may sue directly for the amount owed and, to the extent successful, will be entitled to recover from Starrett all costs and expenses of the suit, including counsel fees.

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

The following discussion is a summary of certain material U.S. federal income tax consequences of the Merger that may be relevant to U.S. Holders and Non-U.S. Holders (each as defined in this proxy statement) of Shares whose Shares are converted into the right to receive cash pursuant to the Merger. This discussion is limited to Shareholders who hold their Shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes) other than the Retirement Plan Shares. This discussion is based upon the Code, Treasury Regulations promulgated under the Code, rulings, and other published positions of the Internal Revenue Service (the “IRS”) and judicial decisions, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. Any such change or differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax considerations described in this discussion. No advance ruling has been or will be sought from the IRS regarding any matter discussed below.

This discussion is for general information purposes only and does not purport to be a complete analysis of all of the U.S. federal income tax considerations that may be relevant to particular holders in light of their particular facts and circumstances, or to Shareholders subject to special rules under U.S. federal income tax laws, including, for example, but not limited to:

This discussion does not address any U.S. federal tax considerations other than those pertaining to the income tax (such as estate, gift, or other non-income tax considerations) or any state, local or foreign income or non-income tax considerations. In addition, this discussion does not address any considerations arising under the Medicare contribution tax.

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

THE U.S. FEDERAL INCOME TAX TREATMENT OF THE TRANSACTIONS DISCUSSED HEREIN TO ANY PARTICULAR SHAREHOLDER WILL DEPEND ON THE SHAREHOLDER’S PARTICULAR TAX CIRCUMSTANCES. WE URGE YOU TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO YOU IN CONNECTION WITH THE MERGER IN LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES, INCLUDING U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX CONSEQUENCES.

U.S. Holders

This section applies to “U.S. Holders.” For purposes of this discussion, a “U.S. Holder” means a beneficial owner of Shares that is for U.S. federal income tax purposes:

The receipt of cash by a U.S. Holder in exchange for Shares pursuant to the Merger is expected to be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. Holder is expected to recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the Shares surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally equals the amount that such U.S. Holder paid for the Shares. A U.S. Holder’s gain or loss on the disposition of Shares generally will be characterized as capital gain or loss. Any such gain or loss will be long-term capital gain or loss if such U.S. Holder’s holding period, as determined for U.S. federal income tax purposes, in such Shares is more than one (1) year at the time of the completion of the Merger. Under current law, a preferential tax rate on capital gain generally will apply to long-term capital gain of a non-corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations. U.S. Holders who hold different blocks of Shares (Shares purchased or acquired on different dates or at different prices) should consult their tax advisor to determine how the above rules apply to them.

Non-U.S. Holders

This section applies to “Non-U.S. Holders.” For purposes of this discussion, a “Non-U.S. Holder” means a beneficial owner of Shares that is not a U.S. Holder (as defined above).

Subject to the discussion of backup withholding below, a Non-U.S. Holder generally is not expected to be subject to U.S. federal income or withholding tax in respect of gain recognized in connection with the Merger, unless:

Information Reporting and Backup Withholding

Generally, information reporting requirements may apply in connection with payments made to U.S. Holders and Non-U.S. Holders in connection with the Merger.

Backup withholding of tax (currently, at a rate of 24%) is generally expected to apply to the proceeds received by a U.S. Holder pursuant to the Merger, unless the U.S. Holder provides the applicable withholding agent with a properly completed and executed IRS Form W-9 providing such U.S. Holder’s correct taxpayer identification number and certifying that such holder is not subject to backup withholding, or otherwise establishes an exemption, and otherwise complies with the backup withholding rules. Backup withholding of tax may also apply to the proceeds received by a Non-U.S. Holder pursuant to the Merger, unless the Non-U.S. Holder provides the applicable withholding agent with a properly completed and executed IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable IRS Form W-8), attesting to such Non-U.S. Holder’s status as a non-U.S. person and otherwise complies with applicable certification requirements.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder or Non-U.S. Holder generally will be allowed as a credit against such holder’s U.S. federal income tax liability, if any, and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

Foreign Account Tax Compliance Act (FATCA)

Sections 1471 through 1474 of the Code, and the U.S. Treasury Regulations and administrative guidance issued thereunder (which we refer to collectively as “FATCA”), impose a U.S. federal withholding tax of 30% on certain payments made to a “foreign financial institution” (as specially defined under these rules) unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding certain U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or an exemption applies. FATCA also generally will impose a U.S. federal withholding tax of 30% on certain payments made to a non-financial foreign entity unless such entity provides the withholding agent a certification identifying certain direct and indirect U.S. owners of the entity or an exemption applies. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Under certain circumstances, a Non-U.S. Holder might be eligible for refunds or credits of such taxes.

The U.S. Treasury Department released proposed regulations which, if finalized in their present form, would eliminate the federal withholding tax of 30% applicable to the gross proceeds of a sale or other disposition of the Shares. In its preamble to such proposed regulations, the U.S. Treasury Department stated that taxpayers may generally rely on the proposed regulations until final regulations are issued.

Shareholders are encouraged to consult with their own tax advisors regarding the possible implications of FATCA on the disposition of Shares pursuant to the Merger.

THE DISCUSSION ABOVE IS BASED ON CURRENT LAW. LEGISLATIVE, ADMINISTRATIVE OR JUDICIAL CHANGES OR INTERPRETATIONS, WHICH CAN APPLY RETROACTIVELY, COULD AFFECT THE ACCURACY OF THE STATEMENTS SET FORTH THEREIN. THIS DISCUSSION IS FOR GENERAL INFORMATION PURPOSES ONLY. IT DOES NOT ADDRESS TAX CONSIDERATIONS THAT MAY VARY WITH, OR ARE CONTINGENT ON, YOUR INDIVIDUAL CIRCUMSTANCES OR THE APPLICATION OF ANY U.S. NON-INCOME TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-U.S. JURISDICTION AND HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING SUCH MATTERS AND THE TAX CONSEQUENCES OF THE MERGER TO THEM IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.

Reasonable Best Efforts to Consummate the Merger; Regulatory Filings

Pursuant to the Merger Agreement, each of the parties has agreed to, and to cause its respective subsidiaries to, use its respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper, or advisable under applicable laws to consummate the Merger and the other transactions contemplated by the Merger Agreement as promptly as practicable, and, in any event, by or before the Outside Date (as defined in the Merger Agreement), including that the parties have agreed to, or to cause their ultimate parent entity (as such term is defined in the HSR Act) to, cooperate with each other to make any filing or notification required or advisable under any antitrust laws or foreign investment laws as promptly as practicable and in any event prior to the expiration of any applicable legal deadline and supply as promptly as practicable any additional information and documentary material that may be requested pursuant to any antitrust law or foreign investment law as outlined in the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement - Efforts to Consummate the Merger.”

PROPOSAL 1: APPROVAL OF THE MERGER AGREEMENT

The following summary describes the material provisions of the Merger Agreement. The descriptions of the Merger Agreement in this summary and elsewhere in this proxy statement are not complete and are qualified in their entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger, because this summary may not contain all the information about the Merger Agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

The representations, warranties, covenants and agreements described below and included in the Merger Agreement (i) were made only for purposes of the Merger Agreement and as of specific dates; (ii) were made solely for the benefit of the parties to the Merger Agreement; and (iii) may be subject to important qualifications, limitations and supplemental information agreed to by the Company, Parent and Merger Sub in connection with negotiating the terms of the Merger Agreement and contained in the confidential disclosure letter delivered by the Company to Parent and Merger Sub pursuant to the Merger Agreement. In addition, the representations and warranties have been included in the Merger Agreement for the purpose of allocating contractual risk between the Company, Parent and Merger Sub rather than to establish matters as facts and may be subject to standards of materiality applicable to such parties that differ from those applicable to investors. The Shareholders are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Parent and Merger Sub or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement. In addition, you should not rely on the covenants in the Merger Agreement as actual limitations on the respective businesses of the Company, Parent and Merger Sub, because the parties may take certain actions that are either expressly permitted in the confidential disclosure letter delivered by the Company to Parent and Merger Sub pursuant to the Merger Agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The Merger Agreement is described below, and included as Annex A only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding the Company, Parent and Merger Sub or their respective businesses. Accordingly, the representations, warranties, covenants, and other agreements in the Merger Agreement should not be read alone, and you should read the information provided elsewhere in this proxy statement and in our filings with the SEC regarding the Company and its business.

Merger Agreement

On March 8, 2024, the Company entered into the Merger Agreement, by and among the Company, Parent and Merger Sub, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving the Merger.

Principal Terms of the Merger

Effect of the Merger

The Merger Agreement provides that, upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the MBCA, at the Effective Time, Merger Sub will merge with and into the Company, the separate corporate existence of Merger Sub will cease and the Company will continue as the Surviving Corporation. As a result of the Merger, the Surviving Corporation will become a wholly owned subsidiary of Parent and the Class A Common Shares will no longer be publicly traded. In addition, the Class A Common Shares will be delisted from the NYSE and de-registered under the Exchange Act, in each case, in accordance with applicable laws, rules and regulations, and Starrett will no longer file periodic reports with the SEC on account of the Class A Common Shares. The Merger will be governed by the MBCA. If the Merger is consummated, you will not own any shares of capital stock of the Surviving Corporation.

Closing and Effective Time

Subject to the provisions of the Merger Agreement and pursuant to the MBCA, the Closing will take place as soon as practicable, but in no event later than the second (2nd) business day after the satisfaction or, to the extent permitted by law, waiver of the conditions to the Closing (excluding conditions that, by their terms, cannot be satisfied until the Closing, but subject to the satisfaction or, to the extent permitted by law, waiver of such conditions at the Closing) (or on such other date as Parent and the Company may mutually agree). At the Closing, the parties will cause the Merger to be consummated by filing articles of merger with the Secretary of the Commonwealth of Massachusetts in accordance with the MBCA. The Merger will become effective upon the filing of the articles of merger.

Articles of Organization; Bylaws; Directors and Officers

At the Effective Time, the articles of organization and the bylaws of the Company will be amended and restated in their entirety to conform to the forms previously agreed to by the parties and, as so amended, will be the articles of organization and bylaws of the Surviving Corporation until thereafter amended in accordance with the articles of organization and the bylaws of the Surviving Corporation and as provided by applicable law subject to the applicable terms of the Merger Agreement.

At the Effective Time, the directors of Merger Sub immediately prior to the Effective Time will be the initial directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time will be the initial officers of the Surviving Corporation, in each case, until the earlier of his or her death, resignation or removal, or until his or her successor is duly elected and qualified in accordance with the Surviving Corporation’s articles of organization and bylaws. The Company will request that each director of the Company immediately prior to the Effective Time execute and deliver a letter effectuating his or her resignation as a member of the Company Board, to be effective as of the Effective Time.

Conditions to the Closing of the Merger

The obligations of the Company, Parent and Merger Sub to effect the Merger are subject to the satisfaction or, to the extent permitted by law, waiver by all parties to the Merger Agreement in writing at or prior to the Effective Time of each of the following conditions: