<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
[_]Confidential, for Use of the
Check the appropriate box: Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE L.S. STARRETT COMPANY
-----------------------------------------------------
(Name of Registrant as Specified, In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THE L.S. STARRETT COMPANY
121 Crescent Street
Athol, Massachusetts 01331
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
September 15, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of the stockholders of The
L.S. Starrett Company will be held at the office of the Company in Athol,
Massachusetts, on Wednesday, September 15, 1999 at 2:00 p.m. for the following
purposes:
1. To elect a class of three directors, each to hold office for a term of
three years and until his successor is chosen and qualified.
2. To approve the amendment of the Company's By-laws to specify the
circumstances under which indemnification of directors and officers and
certain employees who are trustees and administrators of the Company's
employee benefit plans of the Company is allowed or required.
3. To approve a form of indemnification agreement for directors and
officers and certain employees who are trustees and administrators of
the Company's employee benefit plans.
4. To consider and act upon any other matter that may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed July 23, 1999 as the record date for the
determination of stockholders entitled to vote at the Annual Meeting, or any
adjournments thereof, and to receive notice thereof. The transfer books of the
Company will not be closed.
You are requested to execute and return the enclosed proxy, which is
solicited by the management of the Company.
Steven A. Wilcox, Clerk
Athol, Massachusetts
August 13, 1999
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED FORM OF PROXY IN THE ENCLOSED STAMPED
AND ADDRESSED ENVELOPE. IF YOU DESIRE TO VOTE YOUR SHARES IN PERSON AT THE
ANNUAL MEETING, YOUR PROXY WILL BE RETURNED TO YOU.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
OF
THE L.S. STARRETT COMPANY
121 CRESCENT STREET
ATHOL, MASSACHUSETTS 01331
The enclosed form of proxy and this Proxy Statement have been mailed to
stockholders on or about August 13, 1999 in connection with the solicitation
by the Board of Directors of The L.S. Starrett Company (the "Company") of
proxies for use at the Annual Meeting of Stockholders to be held at the office
of the Company in Athol, Massachusetts on Wednesday, September 15, 1999 at
2:00 p.m., or at any adjournments thereof, for the purposes set forth in the
accompanying notice of annual meeting of stockholders.
It is the intention of the persons named as proxies to vote shares
represented by duly executed proxies for the proposals described in this Proxy
Statement unless contrary specification is made. Any such proxy may be revoked
by a stockholder at any time prior to the voting of the proxy by a written
revocation received by the Clerk of the Company, by properly executing and
delivering a later-dated proxy, or by attending the meeting, requesting return
of the proxy and voting in person. A proxy, when executed and not so revoked,
will be voted at the meeting, including any adjournments thereof; and if it
contains any specifications, it will be voted in accordance therewith.
Stockholders of record as at the close of business on July 23, 1999 will be
entitled to vote at this meeting. On that date, the Company had outstanding
and entitled to vote 5,114,750 shares of Class A Stock and 1,590,525 shares of
Class B Stock. Each outstanding share of Class A Stock entitles the record
holder thereof to one vote and each outstanding share of Class B Stock
entitles the record holder thereof to ten votes. The holders of Class A Stock
are entitled to elect 25% of the Company's directors to be elected at each
meeting and such holders voting together with the holders of Class B Stock as
a single class are entitled to elect the remaining directors to be elected at
the meeting. Except for the foregoing and except as provided by law, all
actions submitted to a vote of stockholders will be voted on by the holders of
Class A and Class B Stock voting together as a single class. Pursuant to
Massachusetts law, the Company's Board of Directors is divided into three
classes with one class to be elected at each annual meeting of stockholders.
I. ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at seven and
designated Andrew B. Sides, Jr., Douglas R. Starrett and Roger U. Wellington,
Jr. to serve as Class I Directors; Douglas A. Starrett and William S. Hurley
to serve as Class II Directors; and George B. Webber and Richard B. Kennedy to
serve as Class III Directors; and, in the case of each director, until his
successor is chosen and qualified.
<PAGE>
It is the intention of the persons named in the proxy to vote for the
election of the three persons named below as Class I Directors, each to hold
office for a term of three years and until his successor is chosen and
qualified.
The names and ages of the nominees for directors proposed by the management,
their principal occupation, the significant business directorships they hold,
the years in which they first became directors of the Company and the amount
of securities of the Company beneficially owned by them as of July 23, 1999
are as follows:
<TABLE>
<CAPTION>
Shares
Beneficially
Owned (1)
(Percent of
Principal Class)
Occupation Director ------------------
Name(Age) Directorships Since Class A Class B
--------- --------------------------------- -------- -------- --------
CLASS I--Director to be elected by Class A Stockholders:
<C> <S> <C> <C> <C>
Andrew B. Sides, Jr. (74)..... Formerly CEO of Rhode Island Tool 1986 250 250
Company, Providence, Rhode (*) (*)
Island, producer of forgings;
Director, Colonial Gas Company.
CLASS I--Directors to be elected by Class A and Class B Stockholders voting
together:
Douglas R. Starrett (79)...... Chairman and CEO of the Company. 1952 52,371(2) 50,344
1.0% 3.2%
Roger U. Wellington, Jr. (58). Treasurer and Chief Financial 1987 10,174(3) 2,987(3)
Officer (*) (*)
of the Company.
The following table sets forth the names and ages of the Class II and III
Directors, their principal occupations, the significant business directorships
they hold, the years in which they first became directors of the Company and
the amount of securities of the Company beneficially owned by them as of July
23, 1999:
<CAPTION>
Shares
Beneficially
Owned (1)
(Percent of
Principal Class)
Occupation Director ------------------
Name(Age) Directorships Since Class A Class B
--------- --------------------------------- -------- -------- --------
CLASS II--Directors serving until 2000 Annual Meeting of Stockholders:
<C> <S> <C> <C> <C>
William S. Hurley(55)......... Vice President and Chief 1993 200(4) --
Financial Officer, CYBEX
International, Inc., Medway,
Massachusetts, producer of
fitness equipment.
Douglas A. Starrett(47)....... President of the Company. 1984 12,238(5) 20,897(5)
(*) 1.3%
CLASS III--Directors serving until 2001 Annual Meeting of Stockholders:
Richard B. Kennedy(56)........ Formerly Vice President, 1996 100(4) --
Marketing, Saint-Gobain (*) (*)
Abrasives, Worcester,
Massachusetts, producer of
abrasives products.
George B. Webber (78)......... Vice President, Webber Gage 1962 69,574(6) 79,435(6)
Division of the Company. 1.4% 5.0%
</TABLE>
- --------
(1) Includes shares beneficially owned as defined in applicable rules of the
Securities and Exchange Commission, whether or not interest in such shares
is disclaimed by the nominee. All shares are held with sole voting and
investment power except as indicated below for certain nominees.
2
<PAGE>
(2) Includes 8,975 Class A and 21,158 Class B shares held with shared voting
and investment power, 3,820 Class A and 680 Class B shares held with
shared voting power only and 1,872 Class A and 4,274 Class B shares held
with sole voting power only. Douglas R. Starrett is the father of Douglas
A. Starrett, the President of the Company.
(3) Includes 977 Class A and 944 Class B shares held with shared voting and
investment power and 7,299 Class A and 2,043 Class B shares held with sole
voting power only.
(4) Shares are held with shared voting and investment power.
(5) Includes 414 Class A and 550 Class B shares held with shared voting and
investment power and 6,675 Class A and 1,776 Class B shares held with sole
voting power only. Douglas A. Starrett is the son of Douglas R. Starrett,
the Chairman and CEO of the Company.
(6) Includes 4,103 Class A and 2,573 Class B shares held with sole voting
power only.
* Less than 1%
At July 23, 1999, the directors' and officers' beneficial ownership of the
Company's Common Stock consisted of 149,519 Class A and 154,553 Class B shares
(2.9% and 9.7%, respectively, of the outstanding shares). Of these shares,
James S. Carey, Vice President Sales of the Company, owned 4,611 Class A and
640 Class B shares. All shares beneficially owned by the directors and
officers were held with sole voting and investment power, except that 11,157
Class A and 22,652 Class B shares were held with shared voting and investment
power, 3,820 Class A and 680 Class B shares were held with shared voting power
only and 24,070 Class A and 11,306 Class B shares were held with sole voting
power only.
Richard Newton, Douglas A. Starrett and Roger U. Wellington, Jr., as
Trustees under the Company's 401(k) Stock Savings Plan and Employee Stock
Ownership Plan, c/o the Company, 121 Crescent Street, Athol, Massachusetts
01331, at July 23, 1999 owned beneficially 1,099,838 Class A and 345,662 Class
B shares (21.5% and 21.7%, respectively, of the outstanding shares) of Common
Stock of the Company, all of which were held with sole dispositive power
subject to the terms of the respective Plans. Except for an aggregate of
23,769 Class A and 11,346 Class B shares allocated to the accounts of Douglas
A. Starrett, Roger U. Wellington, Jr., George B. Webber and Douglas R.
Starrett in the Plans, such shares are not reflected in the holdings in the
above table.
All of the nominees and directors listed above have had the principal
occupations listed for at least five years except for William S. Hurley who
was Vice President Controller of Bolt Beranek and Newman, Inc. until 1996, and
Richard B. Kennedy who was Vice President, Marketing, Saint-Gobain Abrasives
until 1999.
3
<PAGE>
The following table sets forth the persons or groups known by the Company to
be beneficial owners of more than 5% of the Company's Common Stock who are not
disclosed as such elsewhere in this Proxy Statement.
<TABLE>
<CAPTION>
Amount
Name And Address And Nature Of
Of Beneficial Beneficial
Title Of Class Owner Ownership Percent Of Class
- -------------- -------------------------- --------------- ----------------
<S> <C> <C> <C>
Class A............ David L. Babson & Co, Inc. 566,700 shares* 10.7%
One Memorial Drive
Cambridge, MA 02142
</TABLE>
* All shares are held with sole voting and investment power.
During the fiscal year ended June 26, 1999, there were five meetings of the
Company's Board of Directors, three meetings of the Audit Committee and one
meeting of the Salary (Compensation) Committee. The members of the Audit
Committee during fiscal 1999 were Messrs. Kennedy, Hurley and Sides. In
general, the Audit Committee recommends to the Board of Directors the
independent auditors to be selected and confers with the Company's independent
auditors to review the audit scope, the Company's internal controls, financial
reporting issues, results of the audit and the range of non-audit services.
See also "Relationship with Independent Accountants" below. The members of the
Salary Committee during fiscal 1999 were Messrs. Kennedy, Hurley, Sides and
Douglas R. Starrett. The function of the Salary Committee is to review the
salaries of key management personnel. The Company does not have a standing
nominating committee.
Directors who are not employees of the Company receive an annual retainer
fee of $6,000 payable in quarterly installments and a fee of $700, plus
expenses, for each Board of Directors and committee meeting that they attend.
Only one meeting attendance fee is paid for attending two meetings on the same
day. All directors attended at least 75% of the aggregate number of all
meetings of the Board of Directors and of all committees on which they served.
Non-employee directors may elect to defer part or all of their director's fees
in which event such deferred fees and interest thereon will generally be
payable in five equal annual installments after they cease to be a director.
A. Compensation Committee Report
During fiscal 1999 the Compensation Committee of the Company was chaired by
William S. Hurley. The members of the Committee are all the outside directors
and the Chairman and CEO of the Company. The Committee reviews and sets
compensation for all the executive officers listed in the proxy statement. The
Chairman and CEO is not present when his compensation is considered.
Setting compensation is not done by strict formula. It is a subjective
judgment based on the following factors.
We do not look at the performance of just one year, but for a number of
years, and consider the economic climate in all areas of the world where we
operate. We look at how both stockholders and employees at all locations have
fared during these periods.
4
<PAGE>
In particular, we look at stockholders' equity, which shows the value of the
Company to the stockholders. We also look at the dividend policy of the
Company to make sure that it is consistent or improving, since this is
important to all stockholders. At the same time, we must see that there are
funds left in the Company to provide for growth.
We consider stock price movement, bearing in mind that the stock market is
generally short-term oriented and subjected to pressures that are not under
the control of executive officers.
Compensation is primarily made up of basic salary. We make a judgment based
on the above listed considerations and on competitive compensation of
companies of similar size and in similar fields, as shown by a national
survey, The National Executive Compensation Survey. This is the most
comprehensive survey of its kind. It covers top executive positions for
manufacturing organizations by sales volume. We also draw on our knowledge of
the market cost of any executive who might have to be replaced.
The variable pay for the executive officers who have Company-wide
responsibility is the bonus plan. This is the plan which was installed last
year after these officers were removed from the Company domestic profit
sharing plan. This plan is based upon the return on equity and the net margin
on sales. No bonuses are awarded unless a certain minimum is exceeded. Awards
for Company performance above that minimum are made by the judgment of the
Compensation Committee.
There are also long-term incentives for everyone in the Company, including
the officers, to own Company stock. This is available by way of a 401(k) plan
and stock option plans approved by stockholders. All officers participate in
these plans.
The Company does not have special perks for executives that are not
available to everyone in the Company, and we maintain a common sense
relationship between executive pays and average pays.
Last year was an exceptional and record-breaking year for the Company and
the bonus pay for these executive officers reflected that. This year, fiscal
1999, was a good year, but not exceptional. Fiscal 2000 base pays for these
officers are being held to last year's levels and the bonus variable part of
pay awarded to them is significantly reduced, reflecting the year's results.
Compensation Committee
William S. Hurley, Chairman
Richard B. Kennedy
Andrew B. Sides, Jr.
Douglas R. Starrett
Compensation Committee Interlocks and Insider Participation:
There were no Compensation Committee interlocks during the last fiscal year.
Douglas R. Starrett, Chairman and CEO of the Company, served as a member of
the Company's Compensation Committee during fiscal 1999.
5
<PAGE>
B. Remuneration
The following information is given on an accrual basis for the last three
fiscal years with respect to the executive officers of the Company who earned
at least $100,000 in fiscal 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-term
Compensation Compensation
---------------- ------------
Bonus/
Profit All Other
Name and Position Year Salary Sharing Options Compensation*
----------------- ---- -------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
D.R. Starrett.................. 1997 $275,000 $10,670 300 $2,938
Chairman and CEO 1998 289,000 96,000 300 3,283
1999 304,000 52,890 500 3,653
D.A. Starrett.................. 1997 172,000 6,675 300 2,841
President 1998 181,000 60,125 300 3,017
1999 200,000 34,795 200 3,333
G.B. Webber.................... 1997 90,000 3,495 200 1,552
Vice President 1998 100,000 6,700 300 1,667
Webber Gage Division 1999 110,000 2,860 1,246 1,943
James S. Carey................. 1998 105,000 31,740 -- 1,811
Vice President Sales 1999 114,167 7,550 -- 2,018
R.U. Wellington, Jr............ 1997 152,000 5,900 2,071 2,604
Treasurer and CFO 1998 160,000 53,150 -- 2,765
1999 168,000 29,230 4,141 2,800
</TABLE>
- --------
* Consists of the market value of the one-third matching shares allocated
under the Company's 401(k) plan.
C. Retirement Plan
The Company's Employees' Retirement Plan covers all domestic employees who
have at least one year of service and have attained age 21. Benefits under the
Retirement Plan are determined by reducing a formula amount calculated under
the Retirement Plan by 90% of the annuity value of the employee's vested
account balance, if any, under The L.S. Starrett Company Employee Stock
Ownership Plan (the "ESOP"). See below, "Employee Stock Savings and Ownership
Plans." At no time will the combined benefit of any participant under the
Retirement Plan and the ESOP be less than such participant's benefits, if any,
under the Retirement Plan before establishment of the ESOP. The formula amount
calculated under the Retirement Plan is based on the sum of 1.25% of the
employee's average base salary up to his Social Security Covered Compensation
plus 1.70% of the
6
<PAGE>
employee's average base salary over Covered Compensation, times the number of
years of service up to but not exceeding 35 years. An employee's average base
salary is his average base salary for the five consecutive highest paid of his
last ten years of employment.
Pursuant to provisions of the Internal Revenue Code of 1986, as amended, not
more than $160,000 of a participant's annual compensation may be taken into
account in computing a participant's benefit under the plan and annual annuity
benefits may not exceed a specified dollar limit (in general for 1999,
$130,000). However, this limitation shall not operate to reduce the benefits
of any employee accrued prior to the 1994 plan year. The Company has
established a Supplemental Executive Retirement Plan ("SERP") to provide on an
unfunded basis out of the general assets of the Company benefits earned under
the Retirement Plan formula that are in excess of Internal Revenue Code
limits. Amounts paid under the Company's Bonus and Profit-Sharing Plan are not
included in base salary. At July 1, 1999, under the Retirement Plan and SERP
the credited years of service of certain executive officers of the Company and
their credited salaries for the fiscal year then ended were as follows:
Douglas R. Starrett--35 years, $304,000; George B. Webber--35 years, $110,000;
Douglas A. Starrett--22 years, $200,000; James S. Carey--20 years, $114,167;
and Roger U. Wellington, Jr.--14 years, $168,000.
The following table sets forth estimates of the pre-offset formula benefit
amount determined under the Retirement Plan for employees in various salary
and years-of-service categories, calculated as a benefit payable as if an
employee retired in 1999 at age 65. In the case of any employee with a vested
account balance under the ESOP, the formula benefit amount under the
Retirement Plan, estimates of which are shown below, would be subject to
offset by 90% of the annuity value of the ESOP vested account balance, but no
deduction would be made for Social Security benefits or other offset amounts.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Credited Service
Average Annual ----------------------------------------------
Earnings 15 25 35
-------------- ------ ------- -------
<S> <C> <C> <C>
$100,000 23,275 38,800 54,300
125,000 29,650 49,400 69,175
150,000 36,025 60,025 84,050
175,000 42,400 70,650 98,925
200,000 48,775 81,275 113,800
225,000 55,150 91,900 128,675
250,000 61,525 102,525 143,550
275,000 67,900 113,150 158,425
300,000 74,275 123,775 173,300
325,000 80,650 134,400 188,175
</TABLE>
D. Employee Stock Savings and Ownership Plans
The Company has for its domestic employees an Employee Stock Ownership Plan
(ESOP), established in 1984, and a 401(k) Stock Savings Plan (401(k) Plan),
which was established in 1986. Both are designed to supplement retirement
benefits provided under the Company's Retirement Plan and to enable employees
to share in the growth of the Company.
7
<PAGE>
In November 1984 the ESOP purchased 800,000 shares of stock from the Company
using funds obtained from borrowings guaranteed by the Company that were
repaid over a ten year period. Contributions made by the Company as well as
dividends paid on the ESOP's stock holdings were used to repay the ESOP
indebtedness. As the indebtedness was repaid, the stock was allocated to
accounts of participants in the ESOP. Additional cash contributions were made
by the Company to make up for the dividends that were used to pay debt
service. All employees of the Company are participants in the ESOP after
completing one year of service and attaining age 21. Allocations to a
participant's account under the ESOP are made in proportion to the ratio that
the participant's compensation bears to the aggregate compensation of all
participants. As of June 30, 1994, all available ESOP shares had been
allocated and, consequently, no allocations other than forfeitures have been
made during the past five years.
Employees who retire, die, or otherwise terminate employment under the ESOP
will be entitled to receive their vested account balance, which will generally
be distributed at the same time that the employee is eligible to begin
receiving a benefit under the Retirement Plan. An amount equal to 90% of an
employee's vested ESOP account balance, expressed in annuity form, will be
used to offset the employee's benefit under the Retirement Plan. See above,
"Retirement Plan."
The 401(k) Plan is a savings and salary deferral plan that is intended to
qualify for favorable tax treatment under Section 401(k) of the Internal
Revenue Code. To be a participant an employee must have completed six months
of service and be at least 18 years old. Plan participants may authorize
deferral of a portion of their salary through payroll deductions. Participants
may elect to have up to 15% of their compensation (as determined under the
Plan) contributed to a trust fund established for the Plan as a salary
deferral contribution.
The Company contributes to the 401(k) Plan monthly on behalf of each
participant a matching contribution equal to one-third of the first 1% of the
participant's compensation (as determined under the plan) that the participant
contributes as a salary deferral for such month. In addition, the Company may
contribute to the Plan monthly an additional matching contribution equal to a
portion of each participant's additional salary deferral contributions which
are designated by the participant is Match-Eligible Elective Contributions. At
present, the supplemental matching contribution is equal to one-third of the
participant's Match-Eligible Elective Contributions. Salary deferral
contributions vest immediately. Matching contributions vest after five years
of service (as determined under the Plan) or upon the participant's death,
disability or retirement, if earlier.
Participants in the 401(k) Plan are not subject to Federal or state income
tax on salary deferral contributions or on Company matching contributions or
the earnings thereon until such amounts are withdrawn from the Plan. Matching
Contributions and Match-Eligible Elective Contributions to the Plan are
invested in the Company's Common Stock. Other contributions to the Plan are
invested in accordance with participant directions among various mutual funds
made available for this purpose. Withdrawals from the Plan may only be made
upon termination of employment, attainment of age 59 1/2 or in connection with
certain provisions of the Plan that permit hardship withdrawals. The Plan also
permits loans to participants.
For the last three fiscal years ended June 26, 1999, Company matching
contributions for all executive officers of the Company as a group were 1,289
shares and for all employees of the Company as a group were 55,539 shares.
8
<PAGE>
E. Stock Option and Purchase Plans
The Company currently has in effect for the benefit of eligible employees
the 1997 Employees' Stock Purchase Plan (the "1997 Plan") to provide a
convenient means for these employees to acquire an interest in the future of
the Company by purchasing up to 800,000 shares of Common Stock. At June 26,
1999, there were 1,698 employees eligible to participate in the 1997 Plan.
The option price to purchase shares of the Company's Common Stock under the
1997 Plan, as well as the predecessor "1992 Plan," which is identical, is the
lower of 85% of the market price on the date of grant or 85% of the market
price on the date of exercise (two years from the date of grant). The Company
also sells treasury shares to employees under an Employees' Stock Purchase
Plan adopted in 1952 (the "1952 Plan"). The Company, from time to time,
purchases these shares in the open market to be held in treasury. The Company
pays brokerage and other expenses incidental to purchases and sales under the
1952 Plan and employees may authorize regular payroll deductions for purchases
of shares.
The following table sets forth information regarding options for shares of
the Company's Common Stock under the terms of the Company's stock option and
purchase plans for the executive officers of the Company:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Class of Market
Stock and As % Price
Number of Total at Exercise Grant
of Options Employee Grant Price Expiration Date
Name Granted Grants Date (1) Date Value (2)
---- ------------- -------- ------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
D.R. Starrett...... 200 Class B 1.3 $37.75 $32.09 11/2/00 $1,900
300 Class B .8 26.06 22.16 5/24/01 2,000
D.A. Starrett...... 100 Class B .6 37.75 32.09 11/2/00 900
100 Class B .3 26.06 22.16 5/24/01 700
G.B. Webber........ 373 Class B 2.4 37.75 32.09 11/2/00 3,500
873 Class B 2.2 26.06 22.16 5/25/01 5,900
R.U. Wellington.... 1,271 Class B 8.1 37.75 32.09 11/2/00 11,900
2,870 Class B 3.2 26.06 22.16 5/24/01 19,400
</TABLE>
- --------
(1) Exercise price represents 85% of market price on dates of grant. Exercise
price will be 85% of market price on date of exercise, if lower.
(2) Based on the Black-Scholes option pricing model (assuming volatility of
21% and interest rates of 4.3 to 5.3%).
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-The-Money
Number Options at Options at
of Fiscal Year Fiscal Year
Shares Value End (None End (None
Acquired Realized Exercisable) Exercisable)
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
D.R. Starrett....................... 300 $1,257 500 $1,300
D.A. Starrett....................... 300 1,257 500 430
G.B. Webber......................... 100 408 873 3,790
R.U. Wellington, Jr................. 1,898 7,744 2,870 12,460
</TABLE>
F. Stock Performance Graph
The following graph sets forth information comparing the cumulative total
return to holders of the Company's Common Stock over the last five fiscal
years with (1) the cumulative total return of the Russell 2000 Index ("Russell
2000") and (2) an index reflecting the cumulative total returns of the
following companies ("Peer Group"): Badger, Brown & Sharpe, Chicago Rivet &
Machine, Clarcor, Devlieg-Bullard, Eastern Co., Essef, Federal Screw Works,
Gleason, Regal Beloit, Tennant and WD-40.
[GRAPH APPEARS HERE]
10
<PAGE>
II. APPROVAL OF AMENDMENT TO THE COMPANY'S BY-LAWS
Introduction
There has been a considerable amount of litigation in the United States
against corporate directors, officers and employees. The expense of such
litigation has increased the personal exposure of these people to liability
and has made it increasingly difficult for corporations to attract and retain
qualified directors, officers and other persons serving in similar positions
at the request of corporations, such as trustees and administrators of
employee benefit plans.
The Board has recommended that the stockholders approve an amendment of
Section 9 of the by-laws of the Company, a restatement of which is set forth
in Appendix A attached hereto (the "By-law Amendment"). The principal effects
of the By-law Amendment are as follows:
1) The By-law Amendment, in general, updates the indemnification by-law
currently in effect in response to the increased exposure that certain
persons, including Company directors and officers and employees who are
trustees and administrators of the Company's employee benefit plans,
face as a result of serving in those positions.
2) The By-law Amendment requires the Company to indemnify these persons to
the maximum extent permitted under applicable law, including the laws of
The Commonwealth of Massachusetts, where applicable and, in the case of
trustees and administrators of the Company's employee benefit plans, the
Employee Retirement Income Security Act ("ERISA").
3) The By-law Amendment extends indemnification to any employee who serves
at the request of the Company in any capacity with respect to any
employee benefit plan even if that person is not also a director or
officer of the Company.
4) The By-law Amendment protects the Company's directors, officers and
employee benefit plan trustees and administrators from subsequent repeal
or amendment of the indemnification provisions of the Company's by-laws.
5) The By-law Amendment allows the Company to enter into separate
indemnification agreements with each of its directors, officers and
employee benefit plan trustees and administrators.
Section 67 of the Massachusetts Business Corporation Law ("Section 67") and
the Company's by-laws as currently in effect require stockholder approval of
amendments to the Company's by-laws concerning indemnification of the
Company's directors. In addition, the Board considers it appropriate to submit
the By-law Amendment to the stockholders for their approval because the
members of the Board will be the beneficiaries of certain rights established
by the By-law Amendment, and, therefore, the Board members have a personal
interest in the approval of the By-law Amendment. As of the date of this proxy
statement, there is no pending litigation or proceeding involving a director
or officer of the Company or an employee benefit plan trustee or administrator
where indemnification will be required or permitted under the By-law
Amendment.
Indemnification Under Existing By-laws
Section 9 of the by-laws as currently in effect provides that the Company
shall, to the extent legally permissible, indemnify each of its directors and
officers (including persons who serve at its
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request as directors, officers or trustees of another organization or who
serve at its request in any capacity with respect to any employee benefit
plan) against all liabilities and expenses incurred by him or her in
connection with any legal proceeding by reason of his or her being or having
been a director or officer. Indemnification is not allowed with respect to any
matter as to which such person shall have been adjudicated in any proceeding
not to have acted in good faith in the reasonable belief that such person's
action was in the best interests of the Company or, to the extent that such
matter related to service with respect to any employee benefit plan, in the
best interests of the participants or beneficiaries of such employee benefit
plan.
Description of the By-law Amendment
The following discussion summarizes the principal terms of the By-law
Amendment. This discussion is a summary only and is qualified in its entirety
by reference to the By-law Amendment attached hereto as Appendix A.
Stockholders are urged to read and consider the By-law Amendment carefully.
(1) The Company shall, to the maximum extent permitted under applicable
law, indemnify any person against all liabilities and expenses
reasonably incurred in connection with the defense or disposition of
any action, suit or proceeding, in which such person may be involved or
with which such person may be threatened, by reason of the fact that
such person:
(a) is or was or has agreed to be a director or officer of the Company
or while serving as a director or officer is or was serving at the
request of the Company as a director, officer, trustee, employee or
agent of another organization; or
(b) is or was a director, officer or employee who is or was serving or
has agreed to serve at the request of the Company in any capacity
with respect to any employee benefit plan, including trustees and
administrators.
(2) No indemnification shall be provided with respect to any matter
disposed of by settlement unless:
(a) such indemnification is approved by a majority of the holders of
the shares of the Company then entitled to vote for directors,
exclusive of any shares owned by an interested director or officer;
or
(b) such indemnification and such settlement is approved by a majority
of the disinterested directors as being in the best interest of the
Company or employee benefit plan or participants served, as the
case may be; or
(c) if no directors are disinterested, a written opinion, reasonably
satisfactory to the Company, of independent legal counsel that (i)
such indemnification and such settlement, decree or disposition are
in the best interest of the Company or employee benefit plan or
participants served, as the case may be, and (ii) if adjudicated,
such indemnification would not be found to have been prohibited by
law.
As used in the By-law Amendment, a director is "interested" if he or she is
a defendant in the proceeding in question or a similar proceeding, and a
"disinterested director" is any director who is not an interested director.
(3) Expenses reasonably incurred in the defense of any proceeding may be
paid by the Company in advance, upon an undertaking by the person being
indemnified to repay such expenses if it is ultimately determined that
indemnification for such expenses is not authorized under the by-laws.
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(4) Any repeal or modification of the indemnification provisions of the By-
law Amendment shall not adversely affect any right or protection of a
director or officer or employee benefit plan trustee or administrator
relating to any acts or omission of such person occurring prior to such
repeal or modification.
(5) The Company may enter into indemnification agreements with any
director, officer or employee benefit plan trustee or administrator so
long as such agreement is in accordance with the provisions of the By-
law Amendment.
Massachusetts Law Regarding Indemnification
Section 67 permits, in part, indemnification by Massachusetts corporations
of its directors, officers, employees, and persons who serve at its request in
any capacity with respect to any employee benefit plan. Indemnification is
permitted to the extent specified in or authorized by a corporation's articles
of organization, a by-law adopted by the stockholders or a vote adopted by the
holders of a majority of the stock entitled to elect directors. Section 67,
however, prohibits a corporation from indemnifying a person with respect to
any matter who has been adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the corporation,
or to the extent that the matter relates to service with respect to an
employee benefit plan, in the best interest of the participants or
beneficiaries of such employee benefit plan.
In addition, Section 67 specifically permits a corporation to advance
expenses incurred in defending the action or proceeding if the indemnified
person undertakes to repay the amount advanced should such person later be
adjudicated not to be entitled to indemnification under Section 67. Any such
indemnification may be provided although the person to be indemnified is no
longer an officer, director, employee or agent of the corporation or of such
other organization or no longer serves with respect to any employee benefit
plan.
Reasons for Adoption of the By-law Amendment
The increase in the frequency of litigation and amount of claims directed
against directors and officers and other representatives of publicly held
companies has expanded the challenges and risks in performing these functions.
As a result of this increase in potential liability and the relatively small
compensation associated with service as a director or officer, it has become
increasingly difficult for many businesses similar to the Company to hire and
retain talented and experienced directors, officers and other representatives.
To date, the Company has not experienced significant difficulties in
attracting and retaining persons to serve as directors, officers or trustees
or administrators of employee benefit plans. The Company expects to continue
to recruit qualified persons for these positions and believes that such
persons will be more willing to serve in these positions if they are afforded
additional protection from personal liability.
In light of the foregoing, the Board has determined that it is in the best
interest of the Company and its stockholders to adopt the By-law Amendment.
Possible Disadvantages of the By-law Amendment
The By-law Amendment, in general, broadens the Company's obligation to
indemnify its directors and officers. As a result, the Company is more likely
to expend its resources to indemnify its
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directors or officers for the underlying liabilities as well as the expenses
of defending the suit than would be the case without the By-law Amendment. In
addition, this broadened indemnification obligation would now extend to
trustees and administrators of the Company's employee benefit plans who are
not directors or officers. Furthermore, once the stockholders have adopted the
By-law Amendment, any subsequent repeal or amendment of its provisions will
not limit the protection afforded by it for acts or omissions occurring prior
to such repeal or amendment. Finally, the stockholders should recognize that
the directors may benefit from the indemnification protection afforded by the
By-law Amendment, and therefore, the directors have a direct personal interest
in the approval of the By-law Amendment.
Vote Required and Board of Directors' Recommendation
Approval of this proposal will require the affirmative vote of at least a
majority of the votes of the holders of all shares of Class A and Class B
Common Stock of the Company actually voted at the Annual Meeting other than
votes represented by the shares beneficially owned by members of the Board and
officers. The Board believes that the By-law Amendment will serve, protect and
enhance the best interest of the stockholders of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR' THE APPROVAL OF THE
BY-LAW AMENDMENT.
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III. APPROVAL OF INDEMNIFICATION AGREEMENTS
Introduction
The stockholders are being asked to approve proposed indemnification
agreements in substantially the form attached hereto as Appendix B (each, an
"Indemnification Agreement"). The Company intends to enter into these
Indemnification Agreements with each of its directors, officers or trustees or
administrators of the Company's employee benefit plans. The Indemnification
Agreements generally indemnify these persons against certain liabilities
arising out of their service in such capacities consistent with the By-law
Amendment discussed in II. above.
The Board has recommended the approval of the Indemnification Agreements in
addition to the By-law Amendment to supplement its policy of providing
indemnification for persons serving in critical positions for the Company. The
By-law Amendment would provide a level of protection from personal liability
for the Company's directors, officers and employee benefit plan trustees and
administrators that the Board recommends is in the best interest of the
Company. Additionally, the By-law Amendment would allow the Company to enter
into Indemnification Agreements on behalf of the Company. Each Indemnification
Agreement will supplement the By-law Amendment by setting forth in greater
detail the terms and conditions of indemnification provided by the Company. In
addition, each Indemnification Agreement would be a binding contractual
obligation of the Company under which each director, officer and employee
benefit plan trustee and administrator could enforce his or her entitlement to
indemnification.
The Board considers it appropriate to submit the Indemnification Agreements
to the stockholders for their approval because the members of the Board have a
personal interest in the approval of these agreements as parties to, and
beneficiaries of, the rights established by the Indemnification Agreements. As
of the date of this proxy statement, there is no pending litigation or
proceeding involving a director or officer of the Company or a trustee or
administrator of its employee benefit plans where indemnification will be
required or permitted under the Indemnification Agreement.
Principal Terms of the Indemnification Agreements
The following discussion summarizes the principal terms of the form of
Indemnification Agreement that supplement the indemnification protection
afforded by the By-law Amendment. This discussion is a summary only and is
qualified in its entirety by reference to the form of Indemnification
Agreement attached hereto as Appendix B. Stockholders are urged to read and
consider the form of Indemnification Agreement carefully.
(1) The indemnification provided under the By-law Amendment to directors,
officers and employees who are trustees or administrators of the
Company's employee benefits plans (each, an "Indemnitee") would be to
the maximum extent permitted under applicable law, including the laws
of The Commonwealth of Massachusetts and, in the case of any trustee or
administrator of an employee benefit plan, ERISA.
(2) The Company will pay no indemnity:
(a) to the extent paid for by D & O Insurance or Fiduciary Insurance
maintained by the Company;
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(b) if such indemnity is judged to be in violation of law;
(c) related to any proceeding initiated by the Indemnitee and not
authorized by the Board;
(d) in connection with any judgment against the Indemnitee for an
accounting of profits made from the purchase or sale by the
Indemnitee of securities of the Company pursuant to the provisions
of Section 16(b) of the Exchange Act or similar provisions of any
federal, state or local law; and
(e) in connection with fraudulent, dishonest or willful misconduct or
misappropriation of assets by the Indemnitee.
(3) Upon notification by the Indemnitee of commencement of any proceeding:
(a) the Company may participate in the proceeding at its own expense;
(b) the Company may assume the defense of the proceeding (unless the
Indemnitee reasonably concludes that there is a conflict of
interest) after which the Company will not be liable to the
Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by the Indemnitee subject to certain
exceptions;
(c) the Company will not be liable to indemnify the Indemnitee for any
amounts paid in settlement of any action or claim effected without
its written consent; and
(d) the Company may settle any action except in any manner which would
impose any penalty or limitation on the Indemnitee without the
Indemnitee's written consent.
(4) Expenses reasonably incurred in the defense of any proceeding may be
paid by the Company in advance in accordance with the By-Law Amendment.
However, the Company shall not be required to advance any expense to
the Indemnitee if he or she:
(a) commences any proceeding as a plaintiff, unless such advance is
authorized by the Board; and
(b) is a party to any proceeding brought by the Company against the
Indemnitee alleging willful misappropriation of assets, disclosure
of confidential information or any other willful and deliberate
breach in bad faith of his or her duty to the Company or its
stockholders or the employee benefit plan or participants served,
as the case may be.
(5) Upon written request by the Indemnitee, the determination of the
Indemnitee's entitlement to indemnification shall be made:
(a) if a change in control (as defined in the Indemnification
Agreement) shall have occurred, by independent legal counsel (as
selected in accordance with the Indemnification Agreement) in a
written opinion to the Board; or
(b) if a change of control shall not have occurred, (i) by a majority
vote of the disinterested directors, or (ii) if there are no such
disinterested directors or, if such disinterested directors so
direct, by independent legal counsel in a written opinion to the
Board, or (iii) if so directed by the Board, by the stockholders of
the Company.
(6) The Indemnitee will be presumed to be entitled to indemnification or
advancement of expenses and the Company shall have the burden of proof
to overcome that presumption in making a determination as to such
entitlement.
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(7) For purposes of any determination of good faith, Indemnitee shall be
deemed to have acted in good faith if the Indemnitee's action is based
on the records of the Company, information supplied by the officers of
the Company, the advice of legal counsel for the Company, or
information given in reports by an independent certified public
accountant or other expert selected with reasonable care by the
Company.
The enforceability of certain of the provisions of the Indemnification
Agreements has not been tested in court and remains subject to considerations
of state and federal law and public policy.
Reasons for Adoption of the Indemnification Agreements
The Board believes that the best interest of the Company and its
stockholders will be served by maximizing the protection of its directors,
officers and trustees and administrators of its employee benefit plans from
the increased exposure to personal liability as a result of serving in those
positions. The approval and ratification of the Indemnification Agreements by
the stockholders will supplement the protection provided by the By-law
Amendment by setting forth in greater detail the terms and conditions of the
indemnification provided by the Company pursuant to the By-law Amendment. In
addition, the Indemnification Agreements would be binding agreements of the
Company that provide each director, officer and employee benefit plan trustee
and administrator with a separate contractual right under which each can
enforce his or her entitlement to indemnification. Therefore, to provide
increased protection to persons serving in critical positions for the Company
from the risk of litigation, the Board recommends that the Indemnification
Agreements be approved.
Possible Disadvantages of the Indemnification Agreements
The By-law Amendment and the Indemnification Agreements, in general, broaden
the Company's obligation to indemnify its directors and officers. As a result,
the Company is more likely to expend its resources to indemnify its directors
or officers for the underlying liabilities as well as the expenses of
defending the suit than would be the case without the By-law Amendment and the
Indemnification Agreements. Furthermore, once the Indemnification Agreements
are approved and subsequently entered into with the respective Indemnitees,
the protection afforded by these agreements cannot be reduced without the
Indemnitee's consent. Finally, the stockholders should note that the current
directors of the Company have a direct personal interest in the approval of
the Indemnification Agreements.
Vote Required and Board of Directors Recommendation
Approval of this proposal will require the affirmative vote of at least a
majority of the votes of holders of all issued and outstanding shares of Class
A and Class B Common Stock of the Company entitled to vote at the annual
meeting other than votes represented by the shares beneficially owned by
members of the Board and officers. The Board believes that the Indemnification
Agreements will serve, protect and enhance the best interests of the
stockholders of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR' THE APPROVAL OF THE
INDEMNIFICATION AGREEMENTS.
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IV. RELATIONSHIP WITH INDEPENDENT AUDITORS
During the year ended June 26, 1999, Deloitte & Touche was engaged to
perform the annual audit. Representatives of Deloitte & Touche are expected to
be present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so; they will be available to respond to
appropriate questions.
The Company presently expects to engage Deloitte & Touche as auditors for
the 2000 fiscal year, but the selection will not be made until the September
1999 meeting of the Company's Board of Directors.
V. GENERAL
A. Solicitation and Voting
In case any person or persons named herein for election as a director should
not be available for election at the Annual Meeting, proxies in the enclosed
form (in the absence of express contrary instructions) may be voted for a
substitute or substitutes as well as for other persons named herein.
As of the date of this statement your management knows of no business that
will be presented to the Annual Meeting that is not referred to in the
accompanying notice, other than the approval of the minutes of the last
meeting of stockholders, which action will not be construed as approval or
disapproval of any of the matters referred to in such minutes.
As to other business, if any, that may properly come before the Annual
Meeting, it is intended that proxies in the attached form that do not contain
specific instructions to the contrary will be voted in respect thereof in
accordance with the judgment of the persons voting the proxies.
A summary of the Annual Meeting of the Stockholders of the Company will be
sent to each stockholder.
The enclosed proxy is solicited by the Board of Directors of the Company.
The cost of solicitation will be borne by the Company. Such solicitation will
be made by mail and may also be made by the Company's officers and employees
personally or by telephone or telegram. The Company will, on request,
reimburse brokers, custodians and nominees for their expenses in sending
proxies and proxy material to beneficial owners. A proxy that is executed but
that does not specify a vote for, against or in abstention will be voted in
accordance with the recommendation of the Board of Directors contained herein.
Consistent with state law and under the Company's by-laws, a majority of the
shares entitled to be cast on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter. Votes cast by
proxy or in person at the Annual Meeting will be counted by persons appointed
by the Company to act as election tellers for the Annual Meeting. The three
nominees for election as directors at the Annual Meeting who receive the
greatest number of votes properly cast for the election of directors shall be
elected directors.
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The election tellers will count shares represented by proxies that withhold
authority to vote for a nominee for election as a director or that reflect
abstentions and "broker non-votes" (i.e., shares represented at the meeting
held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum. Abstentions and broker non-
votes will not be counted in favor of or against, and will have no other
effect on the election of directors (Section I) or the adoption of the By-law
Amendment (Section II). Abstentions and broker non-votes will have the effect
of a vote against the adoption of the Indemnification Agreements (Section
(III).
B. Submission of Stockholder Proposals
Stockholder proposals for inclusion in the Company's proxy statement for its
2000 Annual Meeting must be received by the Company no later than April 14,
2000.
Under the Company's By-laws, stockholders who wish to make a proposal at the
2000 Annual Meeting--other than one that will be included in the Company's
proxy statement--must notify the Company no earlier than April 23, 2000 and no
later than May 23, 2000. If a stockholder who wishes to present a proposal
fails to notify the Company by May 23, 2000, the stockholder would not be
entitled to present the proposal at the meeting. If, however, notwithstanding
the requirements of the Company's by-laws, the proposal is brought before the
meeting, then under the SEC's proxy rules the proxies solicited by management
with respect to the 2000 Annual Meeting will confer discretionary voting
authority with respect to the stockholder's proposal on the persons selected
by management to vote the proxies. If a stockholder makes a timely
notification, the proxies may still exercise discretionary voting authority
under circumstances consistent with the SEC's proxy rules.
IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED IT IS IMPORTANT THAT
THE PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS ARE URGED TO EXECUTE
AND RETURN THE ENCLOSED PROXY IN THE STAMPED ENVELOPE ADDRESSED TO THE COMPANY
AT ATHOL, MASSACHUSETTS. Stockholders who send in proxies, but attend the
Annual Meeting in person, may withdraw their proxies and vote directly if they
prefer or may allow their proxies to be voted with the similar proxies sent in
by other stockholders.
August 13, 1999
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APPENDIX A
SECTION 9. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent permitted from time to time
under applicable law, indemnify any person against all liabilities and
expenses, including amounts paid in satisfaction of judgments, in settlement
or as fines and penalties, and counsel fees, reasonably incurred by such
person in connection with the defense or disposition of any action, suit or
other proceeding, whether civil, criminal, administrative or investigative, in
which such person may be involved or with which such person may be threatened,
by reason of the fact that such person
(a) is or was or has agreed to be a director or officer of the corporation
or while serving as a director or officer is or was serving at the
request of the corporation as a director, officer, trustee, employee or
agent of another organization; or
(b) is or was a director, officer or employee who is or was serving or has
agreed to serve at the request of the corporation in any capacity with
respect to any employee benefit plan.
Such indemnification shall be provided although the person to be indemnified
is not currently a director, officer, trustee, employee or agent of the
corporation or such other organization or no longer serves with respect to any
such employee benefit plan.
Notwithstanding the foregoing, no indemnification shall be provided with
respect to any matter disposed of by settlement, consent decree or other
negotiated disposition unless
(a) such indemnification shall have been approved by the holders of the
shares of the corporation's capital stock then entitled to vote for
directors, voting such shares as a single class, by a majority of the
votes cast on the question exclusive of any shares owned by an
interested director or officer; or
(b) such indemnification and such settlement, decree or disposition shall
have been approved as being in the best interest of the corporation or
organization or plan or participants served, as the case may be, after
notice that it involves such indemnification, by a majority of the
disinterested directors (or, if applicable, the sole disinterested
director) then in office (whether or not constituting a quorum); or
(c) if no directors are disinterested, a written opinion, reasonably
satisfactory to the corporation, of independent legal counsel selected
by the corporation shall have been furnished to the corporation that
(i) such indemnification and such settlement, decree or disposition are
in the best interest of the corporation or organization or plan or
participants served, as the case may be, and (ii) if adjudicated, such
indemnification would not be found to have been prohibited by law.
Expenses reasonably incurred in the defense or disposition of any such
action, suit or other proceeding may be paid from time to time by the
corporation in advance of the final disposition thereof upon receipt of an
undertaking by the person so indemnified to repay to the corporation the
amounts so paid if it is ultimately determined that indemnification for such
expenses is not authorized under this section. Such undertaking may be
accepted without reference to the financial ability of such person to make
repayment.
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The right of indemnification hereby provided shall not be exclusive of or
affect any other rights to which any person may be entitled. As used in this
section, the term "person" includes the heirs, executors, administrators and
personal representatives of any person, an "interested" director or officer is
one against whom in such capacity the proceeding in question or another
proceeding on the same or similar grounds is then pending or threatened, and a
"disinterested director" is any director who is not an interested director.
The absence of any express provision for indemnification shall not limit any
right of indemnification existing independently of this section.
Any repeal or modification of the foregoing provisions of this Section 9
shall not adversely affect any right or protection of a director or officer of
the corporation or an employee of the corporation serving at the request of
the corporation in any capacity with respect to an employee benefit plan with
respect to any acts or omission of such director, officer or employee
occurring prior to such repeal or modification.
The corporation may enter into an indemnification agreement with any person
afforded indemnification by the corporation pursuant to this Section 9 so long
as such agreement is in accordance with the provisions of this Section 9.
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APPENDIX B
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into this day of , 1999,
("Agreement"), by and between The L.S. Starrett Company, a Massachusetts
corporation, (the "Corporation"), and ("Indemnitee"):
WHEREAS, the By-laws, as amended of the Corporation (the "By-laws") state
that the Corporation shall, to the maximum extent permitted from time to time
under applicable law and subject to certain other limitations, indemnify each
person who serves as director or officer of the Corporation or while serving
as a director or officer is or was serving at the request of the Corporation
as a director, officer, trustee, employee or agent of another organization or
who is or was a director, officer or employee who is or was serving at the
request of the Corporation in any capacity with respect to any employee
benefit plan (each, an "Indemnified Position"), against certain liabilities
and expenses; and
WHEREAS, the Corporation has requested that Indemnitee serve in an
Indemnified Position; and
WHEREAS, Indemnitee has relied upon the indemnification provisions in the
By-laws of the Corporation as a source of protection against inordinate risks
of claims and actions against him or her arising out of his or her service to,
and activities on behalf of, the Corporation and is only willing to continue
to serve on behalf of the Corporation on the condition that the Corporation
enter into an agreement in substantially the form hereto.
NOW, THEREFORE, in consideration of Indemnitee's continued service in an
Indemnified Position for or at the request of, the Corporation after the date
hereof, the parties hereto hereby agree as follows:
1. Indemnification of Indemnitee.
(a) The Corporation hereby agrees, to the maximum extent permitted from
time to time under applicable law, including the laws of the
Commonwealth of Massachusetts and, in the case of any Indemnitee
serving with respect to an employee benefit plan (each, a "Plan"), the
Employee Retirement Income Security Act ("ERISA"), to indemnify
Indemnitee against all liabilities and expenses, including amounts paid
in satisfaction of judgments, in settlement or as fines and penalties,
and counsel fees, reasonably incurred by Indemnitee in connection with
the defense or disposition of any action, suit or other proceeding (a
"Proceeding"), whether civil, criminal, administrative or
investigative, in which Indemnitee may be involved or with which
Indemnitee may be threatened, by reason of the fact that Indemnitee is
or was or has agreed to serve in an Indemnified Position.
(b) Notwithstanding the foregoing, no indemnification shall be provided
with respect to any matter disposed of by settlement, consent decree or
other negotiated disposition unless:
(i) such indemnification shall have been approved by the holders of the
shares of the Corporation's capital stock then entitled to vote for
directors, voting such shares as a single class, by a majority of
the votes cast on the question exclusive of any shares owned by an
interested director or officer; or
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(ii) such indemnification and such settlement, decree or disposition
shall have been approved as being in the best interest of the
corporation or organization or plan or participants served, as the
case may be, after notice that it involves such indemnification,
by a majority of the Disinterested Directors (or, if applicable,
the sole Disinterested Director) then in office (whether or not
constituting a quorum); or
(iii) if no Disinterested Directors exist, a written opinion,
reasonably satisfactory to the Corporation, of independent legal
counsel selected by the Corporation shall have been furnished to
the Corporation that (A) such indemnification and such
settlement, decree or disposition are in the best interest of the
corporation or organization or plan or participants served, and
(B) if adjudicated, such indemnification would not be found to
have been prohibited by law.
(c) As used in this section, an "interested" director is one against whom
in the capacity of an Indemnified Position the Proceeding in question
or another Proceeding on the same or similar grounds is then pending or
threatened, and a "Disinterested Director" is any director who is not
an interested director. The absence of any express provision for
indemnification shall not limit any right of indemnification existing
independently of this section.
2. Additional Limitations on Indemnity. No indemnity pursuant to Section 1
hereof shall be paid by the Corporation;
(a) except to the extent the aggregate of losses to be indemnified
thereunder exceeds the sum of such losses for which Indemnitee is
indemnified pursuant to any D & O Insurance or Fiduciary Insurance
purchased and maintained by the Corporation;
(b) in respect to remuneration paid to Indemnitee if it shall be determined
by a final judgment or other final adjudication that such remuneration
was in violation of law or public policy (and, in this respect, both
the Corporation and Indemnitee have been advised that the Securities
and Exchange Commission believes that indemnification for liabilities
arising under the federal securities laws is against public policy and
is, therefore, unenforceable and that claims for such indemnification
should be submitted to appropriate courts for adjudication);
(c) on account of any Proceeding initiated by Indemnitee unless such
Proceeding was authorized in the specific case by action of the Board
of Directors of the Corporation (the "Board");
(d) on account of any suit in which judgment is rendered against Indemnitee
for an accounting of profits made from the purchase or sale by
Indemnitee of securities of the Corporation pursuant to the provisions
of Section 16(b) of the Securities Exchange Act of 1934 and amendments
thereto (the "Exchange Act") or similar provisions of any federal,
state or local statutory law;
(e) on account of Indemnitee's conduct which is finally adjudged to have
been knowingly fraudulent or deliberately dishonest, or to constitute
willful misconduct; and
(f) on account of Indemnitee's conduct which is the subject of a Proceeding
described in Section 5(b)(ii) or (iii) hereof.
3. Continuation of Obligations. All agreements and obligations of the
Corporation contained herein shall continue during the period Indemnitee is
serving and shall continue thereafter so long as
B-2
<PAGE>
Indemnitee shall be subject to any possible claim or threatened, pending or
completed Proceeding, whether civil, criminal or investigative, by reason of
the fact that Indemnitee was serving in an Indemnified Position.
4. Notification and Defense of Claim. Not later than 30 days after receipt
by Indemnitee of notice of the commencement of any Proceeding, Indemnitee
will, if a claim in respect thereof is to be made against the Corporation
under this Agreement, notify the Corporation of the commencement thereof but
the omission so to notify the Corporation will not relieve the Corporation
from any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any such Proceeding as to which Indemnitee notifies
the Corporation of the commencement thereof:
(a) The Corporation will be entitled to participate therein at its own
expense;
(b) Except as otherwise provided below, to the extent that it may wish, the
Corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
reasonably satisfactory to Indemnitee. After notice from the
Corporation to Indemnitee of its election so as to assume the defense
thereof, the Corporation will not be liable to Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall
have the right to employ his or her counsel in such Proceeding but the
fees and expenses of such counsel incurred after notice from the
Corporation of its assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of counsel by
Indemnitee has been authorized by the Corporation, (ii) Indemnitee
shall have reasonably concluded that there is a material conflict of
interest between the Corporation and Indemnitee in the conduct of the
defense of such action which would impair the ability of the
Corporation to adequately defend the interests of the Corporation, or
(iii) the Corporation shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the reasonable fees
and expenses of Indemnitee's separate counsel shall be at the expense
of the Corporation. The Corporation shall not be entitled to assume the
defense of any Proceeding brought by or on behalf of the Corporation or
as to which Indemnitee shall have made the conclusion provided for in
(ii) above; and
(c) The Corporation shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Corporation shall be
permitted to settle any action except that it shall not settle any
action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent. Neither
the Corporation nor Indemnitee will unreasonably withhold its consent
to any proposed settlement.
5. Advancement and Repayment of Expenses.
(a) Expenses, including counsel fees ("Expenses"), reasonably incurred by
Indemnitee in connection with the defense or disposition of any
Proceeding shall be paid from time to time by the Corporation in
advance of the final disposition thereof upon receipt of an undertaking
by Indemnitee to repay the amounts so paid if Indemnitee ultimately
shall be adjudicated to be not entitled to indemnification pursuant to
this Agreement. Such an undertaking may be accepted without reference
to the financial ability of Indemnitee to make repayment.
B-3
<PAGE>
(b) Notwithstanding the foregoing, the Corporation shall not be required to
advance such expense to Indemnitee if he or she:
(i) commences any Proceeding as a plaintiff unless such advance is
specifically approved by a majority of the Board of Directors of
the Corporation;
(ii) is a party to any Proceeding brought by the Corporation which
alleges willful misappropriation of corporate assets by
Indemnitee, disclosure of confidential information in violation of
his or her fiduciary or contractual obligations to the Corporation
or any other willful and deliberate breach in bad faith of his or
her duty to the Corporation or its stockholders;
(iii) in the case of persons serving at the request of the Corporation
with respect to any employee benefit plan, is a party to any
Proceeding brought by the Corporation which alleges willful
misappropriation of the assets of such employee benefit plan by
Indemnitee, disclosure of confidential information in violation
of his or her fiduciary or contractual obligations to such
employee benefit plan or any other willful and deliberate breach
in bad faith of his or her duty to such employee benefit plan or
its participants or beneficiaries.
(c) The Corporation shall indemnify Indemnitee against any and all Expenses
and, if requested by Indemnitee, shall (within seven business days of
such request) advance such Expenses to Indemnitee, which are incurred
by Indemnitee in connection with any action brought by Indemnitee for
(i) indemnification or advance payment of Expenses by the Corporation
under this Agreement or any other agreement or By-law of the
Corporation now or hereafter in effect; or (ii) recovery under any
directors' and officers' liability insurance policies maintained by the
Corporation, regardless of whether Indemnitee ultimately is determined
to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
(d) Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Indemnified Position, a witness in
any Proceeding to which Indemnitee is not a party, he shall be
indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
6. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall submit
to the Corporation a written request, including therein or therewith
such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what
extent Indemnitee is entitled to indemnification. The Clerk of the
Corporation shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has
requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to the
first sentence of Section 6(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall
be made in the specific case:
(i) if a Change in Control (as defined in Annex A) shall have occurred,
by independent legal counsel in a written opinion to the Board, a
copy of which shall be delivered to Indemnitee;
B-4
<PAGE>
(ii) if a Change of Control shall not have occurred, (A) by a majority
vote of the Disinterested Directors, even though less than a
quorum of the Board, or (B) if there are no such Disinterested
Directors or, if such Disinterested Directors so direct, by
independent legal counsel in a written opinion to the Board, a
copy of which shall be delivered to Indemnitee or (C) if so
directed by the Board, by the stockholders of the Corporation;
and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within seven
days after such determination.
The Corporation and the Indemnitee shall each cooperate with the
person, persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination. Any Expenses
incurred by Indemnitee in so cooperating with the person, persons or
entity making such determination shall be borne by the Corporation
(irrespective of the determination as to Indemnitee's entitlement to
indemnification), and the Corporation hereby indemnifies and agrees to
hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is to
be made by independent legal counsel pursuant to Section 6(b) hereof,
the independent legal counsel shall be selected by the Board, provided,
however, if a Change of Control shall have occurred, the independent
legal counsel shall be selected by Indemnitee. For purposes of this
Agreement, "independent legal counsel" means a law firm, or a member of
a law firm, that is experienced in matters of corporation law and would
not have a conflict of interest in representing either the Corporation
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement. The Corporation agrees to pay the reasonable fees of the
independent legal counsel referred to above and to fully indemnify such
counsel against any and all expenses, claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant
hereto.
(d) The Corporation shall not be required to obtain the consent of the
Indemnitee to the settlement of any Proceeding which the Corporation
has undertaken to defend if the Corporation assumes full and sole
responsibility for such settlement and the settlement grants the
Indemnitee a complete and unqualified release in respect of the
potential liability. The Corporation shall not be liable for any amount
paid by the Indemnitee in settlement of any Proceeding that is not
defended by the Corporation, unless the Corporation has consented to
such settlement, which consent shall not be unreasonably withheld.
7. Enforcement.
(a) The Corporation expressly confirms and agrees that it has entered into
this Agreement and assumed the obligation imposed on the Corporation
hereby in order to induce Indemnitee to continue to serve in an
Indemnified Position, and acknowledges that Indemnitee is relying upon
this Agreement in continuing in such capacity.
(b) In the event Indemnitee is required to bring any action to enforce
rights or to collect moneys due under this Agreement and is successful
in such action, the Corporation shall reimburse
B-5
<PAGE>
Indemnitee for all Indemnitee's reasonable fees and expenses in bringing
and pursuing such action.
8. Remedies of Indemnitee. In the event that (i) a determination is made
pursuant to this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of expenses is not timely made pursuant
to this Agreement, or (iii) no determination of entitlement to indemnification
shall have been made pursuant to this Agreement within 90 days after receipt
by the Corporation of the request for indemnification, Indemnitee shall be
entitled to an adjudication by any other court of competent jurisdiction, of
his entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to
be conducted by a single arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association.
9. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to
indemnification or the advancement of Expenses hereunder, the person or
persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification or advancement of expenses
under this Agreement if Indemnitee has submitted a request for
indemnification or the advancement of expenses in accordance with
Section 5(a) of this Agreement, and the Corporation shall have the
burden of proof to overcome that presumption in connection with the
making by any person, persons or entity of any determination contrary
to that presumption.
(b) If the person, persons or entity empowered or selected under Section 6
of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within 60 days
after receipt by the Corporation of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have
been made and Indemnitee shall be entitled to such indemnification,
absent a misstatement by Indemnitee of a material fact, or an omission
of a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for
indemnification, or a prohibition of such indemnification under
applicable law; provided, however, that the foregoing provisions of
this Section 9(b) shall not apply if the determination of entitlement
to indemnification is to be made by the stockholders pursuant to this
Agreement and if:
(i) within 15 days after receipt by the Corporation of the request for
such determination, the Board has resolved to submit such
determination to the stockholders for their consideration at an
annual meeting thereof to be held within 75 days after such receipt
and such determination is made thereat; or
(ii) a special meeting of stockholders is called within 15 days after
such receipt for the purpose of making such determination, such
meeting is held for such purpose within 60 days after having been
so called and such determination is made thereat.
(c) For purposes of any determination of good faith, Indemnitee shall be
deemed to have acted in good faith if Indemnitee's action is based on:
(i) the records or books of account of the Corporation or relevant
enterprise, including financial statements; or
B-6
<PAGE>
(ii) information supplied to Indemnitee by the officers of the
Corporation or relevant enterprise in the course of their duties;
or
(iii) the advice of legal counsel for the Corporation or relevant
enterprise; or
(iv) information or records given in reports made to the Corporation or
relevant enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care
by the Corporation or relevant enterprise; or
(d) The provisions of this Section shall not be deemed to be exclusive or
to limit in any way the other circumstances in which the Indemnitee may
be deemed to have met the applicable standard of conduct set forth in
this Agreement.
10. Subrogation. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable
the Corporation effectively to bring suit to enforce such rights.
11. Non-Exclusivity of Rights. The right of indemnification hereby provided
shall not be exclusive. Nothing contained herein shall affect any other rights
to indemnification to which Indemnitee may be entitled by contract, by any
entity's charter or by-laws or otherwise under law.
12. Survival of Rights. The rights conferred on Indemnitee by this Agreement
shall continue after he or she has ceased to serve in an Indemnified Position
and shall inure to the benefit of Indemnitee's heirs, executors and
administrators.
13. Severability. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any or all of the
provisions hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
14. No Employment Contract. This Agreement shall not be deemed an employment
contract between the Corporation (or any of its subsidiaries) and Indemnitee.
Indemnitee specifically acknowledges that Indemnitee's employment with the
Corporation (or any of its subsidiaries), if any, is at will, and the
Indemnitee may be discharged at any time for any reason, with or without
cause, except as may be otherwise provided in any written employment contract
between Indemnitee and the Corporation (or any of its subsidiaries), other
applicable formal severance policies duly adopted by the Board, or, with
respect to service as a director or officer of the Corporation, by the
Corporation's Articles of Organization, By-laws, and applicable law.
15. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the Commonwealth of Massachusetts.
16. Binding Effect. This Agreement shall be binding upon Indemnitee and upon
the Corporation, its successors and assigns, and shall inure to the benefit of
Indemnitee, his or her heirs, personal representative and assigns and to the
benefit of the Corporation, its successors and assigns.
17. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
B-7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as
of the date first above written.
THE L.S. STARRETT COMPANY
By: _________________________________
Name:
Title:
INDEMNITEE:
_____________________________________
Name:
B-8
<PAGE>
ANNEX A
For the purposes of this Agreement, a "Change of Control" means:
a. The acquisition by any person, corporation, partnership, limited
liability company or other entity (a "Person", which term shall include a
group within the meaning of the Exchange Act) of ultimate beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly of 30% or more of either (i) the then outstanding
shares of common stock of the Corporation (the "Outstanding Corporation Common
Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting Securities"); provided,
however, that for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any such acquisition directly
from the Corporation, except for acquisition of securities upon conversion of
other securities of the Corporation (ii) any such acquisition by the
Corporation, (iii) any such acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any corporation
controlled by the Corporation or (iv) any such acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Annex A; or
b. Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election, by
the Corporation's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
c. Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Corporation
in one or a series of transactions (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, immediately following such Business Combination more
than 50% of, respectively, the outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
Corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Corporation Common Stock and outstanding Corporation Voting
Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Corporation or such corporation resulting from such
Business Combination) ultimately beneficially owns, directly or indirectly,
30% or more of, respectively, the then outstanding shares of common stock of
the Corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the Business
Combination
A-1
<PAGE>
and (iii) at least a majority of the members of the board of directors of the
Corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or
d. Approval by the shareholders of the Corporation of a complete liquidation
or dissolution of the Corporation.
A-2
<PAGE>
PROXY
THE L.S. STARRETT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1999
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas R.
Starrett, and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated on the reverse side at the Annual Meeting of Stockholders of The
L.S. Starrett Company (the "Company") to be held on the 15th day of September,
1999 at 2:00 p.m. at the office of the Company in Athol, Massachusetts, and any
adjournments thereof, upon and in respect of all of the shares of the Class A
and Class B Common Stock of the Company as to which the undersigned may be
entitled to vote or act, with all powers the undersigned would possess if
personally present, and without limiting the general authorization hereby given,
the undersigned directs that his vote be cast as specified in the Proxy. The
undersigned hereby revokes any proxy previously granted to vote the same shares
of stock for said meeting.
- ------------ --------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------ --------------
<PAGE>
[X] Please mark
votes as in
this example.
Management recommends a vote FOR the following proposals as set forth in the
Proxy Statement:
1. ELECTION OF DIRECTORS:
Class A Stockholders: FOR WITHHELD
Andrew B. Sides, Jr. [_] [_]
MARK HERE
Class A and B [_] [_] FOR ADDRESS [_]
Stockholders: CHANGE AND
Douglas R. Starrett NOTE BELOW
Roger U. Wellington, Jr.
______________________________________________
For all nominees except as noted on line above
2. APPROVAL OF AMENDMENT TO THE COMPANY'S BY-LAWS.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. APPROVAL OF INDEMNIFICATION AGREEMENTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Items 1, 2 and 3.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Note: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation, please sign
corporate name in full by authorized officer.
Signature:__________________________________________ Date:___________________
Signature:__________________________________________ Date:___________________
<PAGE>
PROXY
THE L.S. STARRETT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1999
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas R.
Starrett, and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated on the reverse side at the Annual Meeting of Stockholders of The
L.S. Starrett Company (the "Company") to be held on the 15th day of September,
1999 at 2:00 p.m. at the office of the Company in Athol, Massachusetts, and any
adjournments thereof, upon and in respect of all of the shares of the Class A
and Class B Common Stock of the Company as to which the undersigned may be
entitled to vote or act, with all powers the undersigned would possess if
personally present, and without limiting the general authorization hereby given,
the undersigned directs that his vote be cast as specified in the Proxy. The
undersigned hereby revokes any proxy previously granted to vote the same shares
of stock for said meeting.
- ------------ --------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------ --------------
<PAGE>
[X] Please mark
votes as in
this example.
Management recommends a vote FOR the following proposals as set forth in the
Proxy Statement:
1. ELECTION OF DIRECTORS:
Nominees:
Class A Stockholders: FOR WITHHELD
Andrew B. Sides, Jr. [_] [_]
MARK HERE
Class A and B [_] [_] FOR ADDRESS [_]
Stockholders: CHANGE AND
Douglas R. Starrett NOTE BELOW
Roger U. Wellington, Jr.
______________________________________________
For all nominees except as noted on line above
2. APPROVAL OF AMENDMENT TO THE COMPANY'S BY-LAWS.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. APPROVAL OF INDEMNIFICATION AGREEMENTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Items 1, 2 and 3.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Note: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation, please sign
corporate name in full by authorized officer.
Signature:__________________________________________ Date:___________________
Signature:__________________________________________ Date:___________________
<PAGE>
PROXY CARD
FOR VOTING CLASS B COMMON STOCK ONLY
THE L.S. STARRETT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1999
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas R.
Starrett, and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated on the reverse side at the Annual Meeting of Stockholders of The
L.S. Starrett Company (the "Company") to be held on the 15th day of September,
1999 at 2:00 p.m. at the office of the Company in Athol, Massachusetts, and any
adjournments thereof, upon and in respect of all of the shares of the Class B
Common Stock of the Company as to which the undersigned may be entitled to vote
or act, with all powers the undersigned would possess if personally present, and
without limiting the general authorization hereby given, the undersigned directs
that his vote be cast as specified in the Proxy. The undersigned hereby revokes
any proxy previously granted to vote the same shares of stock for said meeting.
- ------------ --------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------ --------------
<PAGE>
[X] Please mark
votes as in
this example.
Management recommends a vote FOR the following proposals as set forth in the
Proxy Statement:
1. ELECTION OF DIRECTORS:
Nominees: Douglas R. Starrett, Roger U. Wellington, Jr.
FOR WITHHELD
[_] [_]
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE BELOW
_______________________________________________
For both nominees except as noted on line above
2. APPROVAL OF AMENDMENT TO THE COMPANY'S BY-LAWS.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. APPROVAL OF INDEMNIFICATION AGREEMENTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Items 1, 2 and 3.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Note: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation, please sign
corporate name in full by authorized officer.
Signature:__________________________________________ Date:___________________
Signature:__________________________________________ Date:___________________
<PAGE>
THE L.S. STARRETT COMPANY
DIRECTIONS UNDER 401(K) STOCK SAVINGS PLAN AND EMPLOYEE STOCK OWNERSHIP PLAN
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1999
The undersigned hereby directs Douglas A. Starrett, Roger U. Wellington, Jr. and
Richard C. Newton, and each of them, as trustees under the 401(k) Stock Savings
Plan and Employee Stock Ownership Plan (the "Plans") of The L.S. Starrett
Company (the "Company"), to vote and act in the manner designated below at the
Annual Meeting of Stockholders to be held on the 15th day of September, 1999 at
2:00 p.m. at the office of the Company in Athol, Massachusetts, and any
adjournments thereof, upon and in respect of all of the shares of the Class A
and Class B Common Stock of the Company allocated to the undersigned under the
Plans. The undersigned hereby revokes any other directions previously given to
vote the same shares of stock for said meeting.
- ------------ --------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------ --------------
<PAGE>
[X] Please mark
votes as in
this example.
Management recommends a vote FOR the following proposals as set forth in the
Proxy Statement:
1. ELECTION OF DIRECTORS:
Nominees:
Class A Stockholders: FOR WITHHELD
Andrew B. Sides, Jr. [_] [_]
MARK HERE
Class A and B [_] [_] FOR ADDRESS [_]
Stockholders: CHANGE AND
Douglas R. Starrett NOTE BELOW
Roger U. Wellington, Jr.
______________________________________________
For all nominees except as noted on line above
2. APPROVAL OF AMENDMENT TO THE COMPANY'S BY-LAWS.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. APPROVAL OF INDEMNIFICATION AGREEMENTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Items 1, 2 and 3.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Note: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation, please sign
corporate name in full by authorized officer.
Signature:__________________________________________ Date:___________________
Signature:__________________________________________ Date:___________________
<PAGE>
PROXY CARD
FOR VOTING CLASS A COMMON STOCK ONLY
THE L.S. STARRETT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE L.S. STARRETT COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1999
The undersigned hereby constitutes and appoints Douglas A. Starrett, Douglas R.
Starrett, and George B. Webber, and each of them, as attorneys and proxies of
the undersigned, with full power of substitution, to vote and act in the manner
designated on the reverse side at the Annual Meeting of Stockholders of The
L.S. Starrett Company (the "Company") to be held on the 15th day of September,
1999 at 2:00 p.m. at the office of the Company in Athol, Massachusetts, and any
adjournments thereof, upon and in respect of all of the shares of the Class A
Common Stock of the Company as to which the undersigned may be entitled to vote
or act, with all powers the undersigned would possess if personally present, and
without limiting the general authorization hereby given, the undersigned directs
that his vote be cast as specified in the Proxy. The undersigned hereby revokes
any proxy previously granted to vote the same shares of stock for said meeting.
- ------------ --------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------ --------------
<PAGE>
[X] Please mark
votes as in
this example.
Management recommends a vote FOR the following proposals as set forth in the
Proxy Statement:
1. ELECTION OF DIRECTORS:
Nominee: Andrew B. Sides, Jr.
FOR WITHHELD
[_] [_]
MARK HERE
FOR ADDRESS [_]
CHANGE AND
NOTE BELOW
2. APPROVAL OF AMENDMENT TO THE COMPANY'S BY-LAWS.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. APPROVAL OF INDEMNIFICATION AGREEMENTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
The Shares represented hereby will be voted as directed herein but, if no
directions are indicated hereon, they will be voted FOR Items 1, 2 and 3.
This instrument delegates discretionary authority with respect to matters not
known or determined at the time of solicitation of this instrument.
PLEASE MARK, SIGN, DATE AND RETURN THIS INSTRUMENT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Note: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation, please sign
corporate name in full by authorized officer.
Signature:__________________________________________ Date:___________________
Signature:__________________________________________ Date:___________________
