UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): ~~March~~May 810, 2024

The L.S. Starrett Company

(Exact name of registrant as specified in its charter)

Massachusetts	1-367	04-1866480
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

121 Crescent Street, Athol, MA 01331

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (978) 249-3551

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☒☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Class A Common - $1.00 Per Share Par Value	SCX	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

On March 8, 2024, The L.S. Starrett Company, a Massachusetts corporation (the “Company” or “Starrett”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Uhu Inc., a Delaware corporation (“Parent”) and an affiliate of MiddleGround Capital (“MiddleGround”), and Unicornfish Corp., a Massachusetts corporation and wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a subsidiary of Parent (the “Surviving Corporation”).

At the effective time of the Merger (the “Effective Time”), (i) each share of Class A Common stock, $1.00 par value per share, of the Company (each, a “Class A Common Share”) and each share of Class B Common stock, $1.00 par value per share, of the Company (each, a “Class B Common Share” and together with the Class A Common Shares, the “Shares”) issued and outstanding immediately prior to the Effective Time (other than any Shares described in clauses (ii) and (iii) below) will be converted into the right to receive $16.19, payable to the holder thereof in cash, without interest (the “Merger Consideration”), and as of the Effective Time, all such Shares will no longer be outstanding and will automatically be cancelled; (ii) each Share (A) held in the treasury of the Company or owned by the Company or any direct or indirect wholly owned subsidiary of the Company immediately prior to the Effective Time or (B) owned by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent or Merger Sub immediately prior to the Effective Time will be cancelled and retired without any conversion thereof; and (iii) each Share that is issued and outstanding immediately prior to the Effective Time and held by a shareholder of the Company who (A) is entitled to appraisal, (B) has not voted in favor of the Merger or consented thereto in writing and (C) has demanded properly in writing payment of fair value for such Share in accordance with Part 13 of the Massachusetts Business Corporation Act (the “MBCA”) (collectively, the “Dissenting Shares”) will not be converted into the right to receive the Merger Consideration unless and until such shareholder of the Company has effectively withdrawn or lost (through failure to perfect or otherwise) their right to obtain payment of the fair value of their Dissenting Shares under the MBCA but will instead be entitled only to such rights with respect to such Dissenting Shares as may be granted to such shareholder under Part 13 of the MBCA.

At or immediately prior to the Effective Time, each award of restricted stock units granted under the Company’s 2012 Long-Term Incentive Plan or the Company’s 2021 Long-Term Incentive Plan (each, a “Company Equity Plan” and, collectively, the “Company Equity Plans”) that is subject to vesting conditions based solely on continued employment or service (each, a “Company RSU”) or is subject to performance-based vesting conditions (each, a “Company PSU” and, together with the Company RSUs, the “Company Equity Awards”) that is outstanding immediately prior to the Effective Time, whether vested or unvested, shall be cancelled and converted into the right to receive an amount in cash, without interest (less applicable tax withholdings), equal to (A) the number of Shares subject to such Company Equity Award immediately prior to the Effective Time (in the case of Company PSUs, assuming full satisfaction of the performance-based vesting conditions at maximum levels) with any remaining service-based vesting requirements deemed fully satisfied, multiplied by (B) the Merger Consideration. Each of the Company Equity Plans will be terminated as of the Effective Time.

Any existing offering periods under the Company’s 2022 Employees’ Stock Purchase Plan and the Company’s 2017 Employees’ Stock Purchase Plan (each, a “Company ESPP”) will continue in accordance with their terms, except that if the Effective Time occurs prior to the purchase date under the applicable offering period, the offering period will be shortened so that the exercise date for the offering period will occur prior to the Effective Time and employees participating in the existing offering period will be entitled to purchase shares under the applicable Company ESPP on the earlier exercise date in accordance with their elections for such offering period and the terms of the applicable Company ESPP, and the Company ESPPs will be terminated.

The closing of the Merger is subject to the satisfaction or waiver of certain conditions, including, among other things, (i) the absence of any law, order, injunction or decree issued by any governmental body of competent jurisdiction prohibiting or preventing the consummation of the Merger, (ii) the approval of the Merger Agreement by the holders of at least two-thirds of the outstanding Shares entitled to vote thereon at a shareholders’ meeting duly called and held for such purpose, (iii) the accuracy of the representations and warranties contained in the Merger Agreement (subject to specified materiality qualifiers), (iv) compliance with the covenants and obligations under the Merger Agreement in all material respects, and (vi) the absence of a material adverse effect with respect to the Company.

The Merger Agreement includes customary representations, warranties and covenants of the Company, Parent and Merger Sub. The Company has agreed to conduct its business in the ordinary course until the Effective Time, subject to customary exceptions.

The Company is subject to customary “no-shop” restrictions on the Company’s ability to solicit alternative acquisition proposals, to furnish information to, and participate in discussions or negotiations with, third parties regarding any alternative acquisition proposals, subject to a customary “fiduciary out” provision that allows the Company, under certain specified circumstances, to furnish information to, and participate in discussions or negotiations with, third parties with respect to an alternative acquisition proposal if the Board of Directors of the Company (the “Board”) determines in good faith, after consultation with its financial advisor and outside counsel, that such alternative acquisition proposal either (i) constitutes a superior proposal (as defined in the Merger Agreement) or (ii) is reasonably likely to lead to or result in a superior proposal.

The Company will coordinate with the trustee or other applicable fiduciary of the Company’s 1984 Employee Stock Ownership Plan, as amended and restated, and the Company’s 2013 Employee Stock Ownership Plan, as amended and restated (together, the “Company ESOP”) regarding the participant pass-through vote for the Shares owned by the Company ESOP in connection with the transactions contemplated by the Merger Agreement. The Company ESOP will be terminated as of the Effective Time.

The Merger Agreement also includes customary termination provisions for each of the Company and Parent, including (i) the Company’s right to terminate the Merger Agreement, subject to certain limitations, (A) to accept a superior proposal or (B)(1) if the Closing shall not have occurred on or before the date required pursuant to the terms of the Merger Agreement, (2) all conditions to Parent’s and Merger Sub’s obligations to consummate the Merger have been satisfied (other than conditions that by their terms are to be satisfied at the Closing, each of which would be, at the time of the termination of the Merger Agreement, satisfied if the Closing were to occur at such time), (3) the Company has certified to Parent and Merger Sub by irrevocable written notice that the Company is ready, willing and able to close on such date and at all times during the three business day period immediately thereafter, and (4) Parent and Merger Sub fail to consummate the Merger within such three business day period following the date of receipt of such notice; (ii) Parent’s right to terminate the Merger Agreement if the Board changes its recommendation that the Company’s shareholders approve the Merger Agreement or the Company approves or adopts, or recommends the approval or adoption of, any alternative acquisition agreement; and (iii) the right of either party to terminate the Merger Agreement if the Effective Time has not occurred on or prior to September 4, 2024 (as may be extended under the Merger Agreement, the “Outside Date”), which Outside Date may be extended to October 4, 2024, in the event that the Effective Time would have occurred by the Outside Date but for the failure to satisfy the closing conditions except those relating to regulatory approvals have been satisfied or waived (other than conditions that by their terms are to be satisfied at the closing).

The Merger Agreement also provides that the Company must pay Parent a fee of $4,350,000 in connection with the termination of the Merger Agreement, subject to certain limitations, if (i) the Board effects a change of its recommendation that the Company’s shareholders approve the Merger Agreement (A) (1) in respect of a superior proposal, the Company terminates the Merger Agreement and, substantially concurrently with such termination, the Company enters into an alternative acquisition agreement in respect of such superior proposal or (2) in respect of an intervening event and Parent terminates the Merger Agreement, or (B) the Company approves or adopts, or recommends the approval or adoption of, any alternative acquisition agreement, and Parent terminates the Merger Agreement; (ii) the Company materially breaches certain specified covenants (subject to a cure period); or (iii) the Merger Agreement is terminated (A) (1) by either party because the Effective Time has not occurred on or prior to the Outside Date or (2) by Parent due to the breach by the Company of its covenants or the Company’s representations and warranties are inaccurate and such breach or inaccuracy causes a failure of a closing condition, (B) a third party has publicly disclosed an acquisition proposal after the date of the Merger Agreement and prior to the termination of the Merger Agreement (and has not publicly withdrawn such acquisition proposal prior to such termination), and (C) within twelve (12) months following such termination, the Company enters into an alternative acquisition agreement with respect to the acquisition proposal (and the transactions contemplated by such acquisition proposal are subsequently consummated (whether during or after such twelve month period)) or the acquisition proposal is consummated. The Merger Agreement provides that Parent must pay the Company a fee of $8,700,000 million in connection with the termination of the Merger Agreement (the “Reverse Termination Fee”) if the Merger Agreement is terminated by the Company due to (i) an Intentional Breach (as defined in the Merger Agreement) by Parent or Merger Sub of its covenants or any of Parent’s or Merger Sub’s representations and warranties is inaccurate or becomes inaccurate and such breach or inaccuracy would cause a failure of a closing condition (subject to a customary cure period) or (ii) (A) the Closing shall not have occurred on or before the date required pursuant to the terms of the Merger Agreement, (B) all conditions to Parent’s and Merger Sub’s obligations to consummate the Merger have been satisfied (other than conditions that by their terms are to be satisfied at the Closing, each of which would be, at the time of the termination of the Merger Agreement, satisfied if the Closing were to occur at such time), (C) the Company has certified to Parent and Merger Sub by irrevocable written notice that the Company is ready, willing and able to close on such date and at all times during the three business day period immediately thereafter, and (D) Parent and Merger Sub fail to consummate the Merger within such three business day period following the date of receipt of such notice. Subject to certain terms, conditions and limitations specified in the Merger Agreement, the parties to the Merger Agreement are also entitled to an injunction to prevent breaches of the Merger Agreement, and to specifically enforce the terms and provisions of the Merger Agreement.

In the event that the Merger Agreement is terminated in certain limited circumstances specified in the Merger Agreement, the Company agrees to promptly (and in any event within ten business days), upon request by Parent, reimburse Parent for all reasonable and documented out-of-pocket costs incurred by Parent and its subsidiaries in connection with the Merger Agreement up to an amount equal to $2,000,000.

Parent and Merger Sub have secured committed financing, consisting of a combination of equity financing to be provided by investment funds affiliated with MiddleGround, on the terms and subject to the conditions set forth in an equity commitment letter provided by such funds, and debt financing to be provided by a certain lender, on the terms and subject to the conditions set forth in a debt commitment letter. The obligations of the lender to provide debt financing under the debt commitment letter are subject to a number of customary conditions.

Investment funds affiliated with MiddleGround have provided a limited guarantee with respect to the payment of the Reverse Termination Fee payable by Parent in the event it becomes payable, as well as certain reimbursement obligations that may be owed by Parent pursuant to the Merger Agreement, subject to the terms and conditions set forth in the Merger Agreement and such limited guarantee.

The foregoing summary of the principal terms of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full copy of the Merger Agreement filed hereto as Exhibit 2.1 hereto and incorporated herein by reference. The summary and the copy of the Merger Agreement are intended to provide information regarding the terms of the Merger Agreement and are not intended to modify or supplement any factual disclosures about the Company in its public reports filed with the U.S. Securities and Exchange Commission (the “SEC”). The assertions embodied in the representations and warranties included in the Merger Agreement were made solely for purposes of the contract among the Company, Merger Sub and Parent and are subject to important qualifications and limitations agreed to by the Company, Merger Sub and Parent in connection with the negotiated terms, including being qualified by confidential disclosures made by the Company to Parent and Merger Sub for the purposes of allocating contractual risk between them that differ from those applicable to investors. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to the Company’s SEC filings or may have been used for purposes of allocating risk among the Company, Parent and Merger Sub rather than establishing matters as facts. Investors should not rely on the representations and warranties or any description of them as characterizations of the actual state of facts of the Company, Parent, Merger Sub or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, and this subsequent information may or may not be fully reflected in public disclosures by the Company or Parent.

Amendment No. 1 to Amended and Restated Rights Agreement

On March 8, 2024, the Board approved an Amendment No. 1 (the “Amendment No.1”) to the Amended and Restated Rights Agreement, dated as of October 30, 2020, between the Company and Computershare Inc. as rights agent (the “Rights Agreement”), which will be executed and effective as of March 8, 2024. Amendment No. 1 prevents the approval, execution, delivery or performance of the Merger Agreement, or the consummation prior to the termination of the Merger Agreement of the Merger or any of the other transactions contemplated by the Merger Agreement in accordance with its terms, from, among other things, (i) resulting in a Shares Acquisition Date, a Distribution Date (each as defined in the Rights Agreement) or in any way permit any Rights (as defined in the Rights Agreement) to be exercised for consideration or exchanged; (ii) constituting an event set forth in Section 11(a) or Section 13 of the Rights Agreement; (iii) causing any of Parent, Merger Sub or their respective affiliates or associates to be deemed to be an Acquiring Person (as defined in the Rights Agreement) for any purpose in the Rights Agreement; or (iv) causing any officer, director or employee of Parent, Merger Sub or their respective affiliates or associates to be deemed to be the “Beneficial Owner” of or to “beneficially own” (each as defined in the Rights Agreement) any securities that are “beneficially owned” (as defined in the Rights Agreement) by any of Parent, Merger Sub or their respective affiliates or associates, including in a fiduciary capacity.

The foregoing description of Amendment No. 1 is only a summary, does not purport to be complete and is qualified in its entirety by reference to Amendment No. 1, a copy of which is attached as Exhibit 4.1 and is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 8, 2024, the Company entered into an Amended and Restated Change in Control Agreement (the “CIC Agreement”) with Douglas A. Starrett, the Company’s Chief Executive Officer, to clarify certain language within the executive’s existing agreement. The economic terms and conditions of the CIC Agreement did not change as a result of the amendment.

The foregoing description of the CIC Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the CIC Agreement, a copy of which is attached as Exhibit 10.1 and is incorporated herein by reference.

Item 8.01 Other Events.

OnAs previously disclosed, on March 118, 2024, The L.S. Starrett Company, a Massachusetts corporation (the “Company” or “Starrett”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Uhu Inc., a Delaware corporation (“Parent”) ~~issued~~and an affiliate of MiddleGround Capital, and Unicornfish Corp., a ~~joint~~Massachusetts ~~press~~corporation ~~release~~and ~~announcing~~wholly ~~the~~owned ~~execution~~subsidiary of Parent (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger ~~Agreement.~~Sub Awill ~~copy~~be ofmerged with and into the ~~joint~~Company ~~press~~(the ~~release~~“Merger”), iswith ~~attached~~the Company surviving the Merger as ~~Exhibit~~a 99subsidiary of Parent.1 ~~hereto~~On April 12, 2024, Starrett filed a definitive proxy statement with the Securities and ~~incorporated~~Exchange ~~herein~~Commission by(the ~~reference~~“SEC”) in connection with the Merger (the “Proxy Statement”).

~~Also~~Since the filing of the Proxy Statement, two complaints have been filed against Starrett and the members of its Board of Directors in the Supreme Court of the State of New York, County of New York, captioned Richard Williams, derivatively on ~~March~~behalf 11of The L.S. Starrett Company v. Thomas J. Riordan, Christopher C. Gahagan, Douglas A. Starrett, Deborah R. Gordon, Scott W. Sproule, Charles J. Alpuche, and The L.S. Starrett Company (filed May 2, 2024) and Matthew Stevens, ~~the~~derivatively on behalf of The L.S. Starrett Company ~~disseminated~~v. ~~certain~~Thomas ~~communications~~J. toRiordan, ~~its~~Christopher ~~customers~~C. inGahagan, ~~connection~~Douglas ~~with~~A. ~~the~~Starrett, ~~Merger~~Deborah ~~Agreement~~R. ~~Such~~Gordon, ~~communications~~Scott ~~are~~W. ~~attached~~Sproule, ~~hereto~~Charles asJ. ~~Exhibit~~Alpuche, 99and The L.S. Starrett Company (filed May 2, 2024) (collectively, the “Merger Actions”). The Merger Actions allege that the Proxy Statement misrepresents and/or ~~are~~omits ~~incorporated~~certain ~~herein~~purportedly bymaterial ~~reference~~information.

~~*****~~Additionally, Starrett has received written demands from various purported Starrett shareholders alleging similar insufficiencies in the preliminary proxy statement filed by Starrett with the SEC on April 2, 2024, or the Proxy Statement (such letters, collectively with the Merger Actions, the “Litigation Matters”).

Starrett believes that the claims asserted in the Litigation Matters are without merit and that no further disclosure beyond that already contained in the Proxy Statement is required under applicable law, as claimed in the Litigation Matters. Nonetheless, to avoid the risk that litigation may delay or otherwise adversely affect the consummation of the Merger and to minimize the expense of defending against the Litigation Matters, and without admitting any liability or wrongdoing, Starrett is making the following supplemental disclosures to the Proxy Statement (the “Supplemental Disclosures”). If additional similar complaints are filed, absent new or significantly different allegations, the Company will not necessarily disclose such additional filings. Nothing in this Current Report on Form 8-K (this “Current Report”) shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the supplemental disclosures set forth herein. To the contrary, Starrett specifically denies all allegations in the Litigation Matters, including that any additional disclosure was or is required, and believes that the Supplemental Disclosures are immaterial.

The Supplemental Disclosures amend and supplement, and should be read in conjunction with the Proxy Statement, which should be read in its entirety and is available on the SEC’s website at www.sec.gov, along with periodic reports and other information Starrett files with the SEC. The Supplemental Disclosures will not change the consideration to be paid to Starrett shareholders in connection with the Merger or the timing of the special meeting of Starrett shareholders (the “Special Meeting”) to be held virtually on May 21, 2024, at 10:00 a.m. Eastern Time. Starrett shareholders will be able to virtually attend and vote at the Special Meeting via the internet at meetnow.global/M5DW22D.

All page references in the information below are to pages in the Proxy Statement, and all capitalized terms used but not defined below shall have the meanings set forth in the Proxy Statement. To the extent the following information differs from or conflicts with the information contained in the Proxy Statement, the information set forth below shall be deemed to supersede the respective information in the Proxy Statement. New text within the amended and supplemented language from the Proxy Statement is indicated in bold and underlined text (e.g., bold, underlined text), and deleted text within the amended and supplemented language from the Proxy Statement is indicated in bold and strikethrough text (e.g., bold, strikethrough text).

The disclosure in the section entitled “Background of the Merger,” beginning on page 33 of the Proxy Statement, is hereby amended and supplemented as follows:

The paragraph beginning “On November 13, 2023, the Transaction Committee convened” on page 37 of the Proxy Statement is hereby amended and supplemented as follows:

On November 13, 2023, the Transaction Committee convened a meeting via videoconference with Mr. Starrett and representatives of Lincoln and Ropes & Gray attending, to discuss each of the November 9 Parent Proposal, the November 9 Party B Proposal and the November 10 Party C Proposal. A representative of Lincoln noted that Party B had engaged several third-party advisors, completed more diligence than the other parties and delivered a mark-up of the merger agreement, which positioned it to be capable of entering into a definitive agreement more quickly than the other parties, but its proposed aggregate purchase price and resulting EBITDA multiple were meaningfully lower than in the September 21 Party B Proposal and the other proposals. He also noted that the proposed purchase prices in the November 9 Parent Proposal and the November 10 Party C Proposal represented EBITDA multiples similar to what was in their original bids, although neither had done as much diligence as Party B to inform their proposals and both only provided high-level issues lists regarding the draft merger agreement. In addition, both Parent and Party C stated that they would require extended periods to complete diligence and sign a definitive agreement. A representative of Ropes & Gray then provided a brief overview of the proposed merger agreement terms included in the proposals, noting, among other things, that the proposed terms were similar and generally within an expected range for a transaction of this nature. Following discussion, the Transaction Committee directed Lincoln to contact Parent and Party C and request best and final proposals to acquire 100% of the Company’s shares on or before December 1, 2023 and to encourage each party to complete substantial diligence to inform those bids. The directors also confirmed that, given Party B’s proposed price, that Party B should not be asked to submit an updated bid and that management should not prioritize any further diligence inquiries from Party B. A representative of Ropes & Gray then reminded the Company Board of its fiduciary duties in connection with a transaction involving a sale of the Company. He noted that certain bidders, including Parent, invited management to rollover their Shares in the transaction and anticipated negotiating post- closing compensation packages with officers, which could mean management has different interests in a sale transaction than other Shareholders. Mr. Starrett confirmed that neither he nor other members of management had discussed a roll-over of Shares with any bidder, including Parent, and acknowledged that they would not have any such conversations without permission from the Company Board. Regardless, no such conversations occurred before the Company entered into the Merger Agreement. To further mitigate any potential conflicts, the representative of Ropes & Gray recommended that the independent directors meet regularly in executive session without Mr. Starrett, the sole management director on the Company Board, to discuss the potential transaction.

The disclosure in the section entitled “Summary of Lincoln’s Financial Analysis,” beginning on page 50 of the Proxy Statement, is hereby amended and supplemented as follows:

The paragraph beginning “Lincoln performed a discounted cash flow analysis” on page 50 of the Proxy Statement is hereby amended and supplemented as follows:

Lincoln performed a discounted cash flow analysis of the Company. A discounted cash flow analysis is a valuation methodology used to derive an intrinsic valuation of a company by calculating the present value of its estimated future cash flows. For purposes of its discounted cash flow analysis, Lincoln utilized and relied upon Management’s Projections, which provided a financial forecast for the fiscal years 2024 through 2026. Lincoln performed a discounted cash flow analysis of the projected unlevered free cash flows of the Company of approximately $10.0 million for the 6-months ending fiscal year 2024, approximately $8.0 million for fiscal year 2025, and approximately $14.0 million for fiscal year 2026, based on the forecasted unlevered after-tax net operating profits, utilizing a 30% tax rate, adjusted for non-cash charges, working capital investments, and capital expenditures as provided for in Management’s Projections. For further information regarding Management’s Projections, see “Certain Unaudited Prospective Financial Information.” Lincoln calculated the present value of the projected unlevered free cash flows utilizing an estimate of the Company’s weighted average cost of capital for the discount rate. In calculating the net present value of the unlevered free cash flows in the discounted cash flow analysis, Lincoln utilized a weighted average cost of capital range of 15.50% to 17.50%. The discount rate range was selected giving consideration to market-based and company-specific risks and was based on Lincoln’s professional judgment and experience. Lincoln calculated the Company’s terminal value range of approximately $110.0 million to approximately $140.0 million using the Gordon Growth perpetuity formula by applying an assumed perpetuity growth rate range of 2.0% to 3.0% to the Company’s terminal year unlevered free cash flows of approximately $17.0 million, normalizing depreciation for 95.0% of capital expenditures and working capital investments for the midpoint of the range of perpetuity growth rates. Lincoln discounted the indicated terminal value to present value using the selected range of discount rates and added the present value of the unlevered free cash flows and the present value of certain tax benefits of approximately $7.0 million based on the tax savings from intangible asset amortization and net operating carryforward losses as provided for in the schedule provided by Management (the “Tax Benefits”). Based on these assumptions, and after rounding, Lincoln’s discounted cash flow analysis indicated an estimated enterprise value range for the Company, including the Tax Benefits, of approximately $120.0 million to approximately $145.0 million. Lincoln then calculated an estimated equity value range for the Company of approximately $110.0 million to approximately $135.0 million by adding the amount of the Company’s cash and cash equivalents of approximately $6.0 million, subtracting the amount of the Company’s debt and debt-like items of approximately $8.0 million, and adjusting for the Company’s pension liability of approximately $8.0 million, net of tax benefits, each as of December 31, 2023. The resulting estimated equity value range of approximately $110.0 million to approximately $135.0 million was then divided by the number of fully diluted Shares outstanding of approximately 7.7 million as of March 4, 2024, as provided by Management, to derive a range of equity values per share of $14.31 to $17.56, as compared to the Merger Consideration of $16.19 per Share in the Merger.

The paragraph beginning “Based on the selected range and after rounding, Lincoln’s selected public companies” on page 51 of the Proxy Statement is hereby amended and supplemented as follows:

Based on the selected range, and after rounding, Lincoln’s selected public companies indicated an estimated enterprise value range for the Company, including the Tax Benefits, of approximately $118.0 million to approximately $148.0 million. Lincoln then calculated an estimated equity value range of approximately $108.0 million to approximately $138.0 million for the Company by adding the amount of the Company’s cash and cash equivalents of approximately $6.0 million, subtracting the amount of the Company’s debt and debt-like items of approximately $8.0 million, and adjusting for the Company’s pension liability of approximately $8.0 million, net of tax benefits, each as of December 31, 2023. The resulting estimated equity value range was then divided by the number of fully diluted Shares outstanding of approximately 7.7 million as of March 4, 2024, as provided by Management, to derive a range of equity values per share of $14.05 to $17.95, as compared to the Merger Consideration in the Merger.

The table following the paragraph beginning “Lincoln reviewed publicly available information related to selected mergers and acquisitions” on page 51 of the Proxy Statement is hereby amended and supplemented as follows:

					Enterprise Value as a Multiple of
Announcement	Target	Acquirer	Closing Date	Enterprise Value	LTM Revenue	LTM EBITDA
February 2021	General Tool & Instruments LLC	Worthington Industries, Inc.	1/29/2021	$120.0 million	1.77x	7.9x
December 2020	Applied Vision Corporation	Antares Vision, Inc.	12/16/2020	$45.0 million	1.58x	11.0x

The disclosure in the section entitled “Miscellaneous,” beginning on page 52 of the Proxy Statement, is hereby amended and supplemented as follows:

The paragraph beginning “Lincoln and its affiliates provide a range of investment banking and financial services” on page 52 of the Proxy Statement is hereby amended and supplemented as follows:

Lincoln and its affiliates provide a range of investment banking and financial services and, in that regard, Lincoln and its affiliates have provided, are currently providing, and may in the future provide investment banking and other financial services to the Company, Parent, or each of their respective affiliates, for which Lincoln and its affiliates would expect to receive compensation. Lincoln has not directly provided such services to Parent, but may do so in the future. Lincoln was engaged by the Company on November 20, 2023 to render an opinion to the Company Board as to whether the Merger Consideration to be received by Shareholders, other than any Shares described in Section 2.1(b) of the Merger Agreement and any Dissenting Shares (as defined in the Merger Agreement), in connection with the Merger was fair, from a financial point of view, to such Company shareholders. Lincoln received fees for its services of approximately $300,000, of which $150,000 was payable at the time Lincoln was engaged by the Company, and the remaining $150,000 the remainder of which became payable upon Lincoln informing the Company Board that it was prepared to deliver its opinion as requested, which are in addition to any payments due to Lincoln under the terms of the M&A Engagement Letter (as defined below). No portion of Lincoln’s fee in connection with the delivery of its opinion is contingent upon either the conclusion reached in its opinion or the consummation of the Merger. Pursuant to the engagement letter between Lincoln and the Company, the Company agreed to customary expense reimbursement and indemnification provisions. In the two years immediately prior to delivering the Opinion, Lincoln was (i) engaged on April 17, 2023 to act as lead financial advisor to the Company in connection with a potential transaction (the “M&A Engagement Letter”) and (ii) Lincoln had been engaged to provide financial advisory services to affiliates and portfolio companies of MiddleGround Capital LLC (“MiddleGround” and such engagements the “MiddleGround Engagements”). Lincoln will receive a customary fee of approximately $2.25 million from the Company for our services under the M&A Engagement Letter, a portion $100,000 of which has been paid, and a significant portion $2.15 million of which is contingent upon the successful completion of the Merger; such fee under the M&A Engagement Letter is separate from, and in addition to, the fee being paid to Lincoln for delivery of its opinion. Lincoln has received, and will or may receive in the future, customary fees for our services, reimbursement for certain expenses, and indemnification against certain liabilities in connection with the MiddleGround Engagements. Fees attributable to Lincoln’s active engagement with a company in which MiddleGround is a shareholder is indeterminable as the engagement is ongoing and the outcome is unknown. The potential fees received will not be material to the overall financial results of Lincoln. In addition, in 2023, Lincoln received a fee of £1.3 million in connection with a MiddleGround Engagement. Also in 2023, Lincoln was retained in connection with a MiddleGround Engagement for which it could receive up to $2 million of fees and to date has received fees of $1 million , which amount was not paid by MiddleGround or any of its affiliates. In 2022, Lincoln was engaged on a project in connection with a MiddleGround Engagement that did not result in any fees.

Additional Information and Where to Find It

This Current Report ~~on Form 8-K~~ relates to the proposed acquisition of Starrett by ~~MiddleGround~~Parent. This ~~communication~~Current Report does not constitute a solicitation of any vote or approval. In connection with the proposed transaction, Starrett ~~plans~~filed tothe ~~file~~Proxy Statement with the SEC ~~and~~on ~~mail~~April 12, 2024. Starrett mailed or otherwise ~~provide~~provided the Proxy Statement to its shareholders aon ~~proxy~~or ~~statement~~about ~~regarding~~April ~~the~~12, ~~proposed transaction~~2024. Starrett may also file other documents with the SEC regarding the proposed transaction. This ~~document~~Current Report is not a substitute for the ~~proxy~~Proxy ~~statement~~Statement or any other document that may be filed by Starrett with the SEC.

BEFORE MAKING ANY VOTING DECISION, STARRETT’S SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY ~~WHEN IT BECOMES AVAILABLE~~ AND ANY OTHER DOCUMENTS FILED BY STARRETT WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE THEREIN BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION.

Any vote in respect of resolutions to be proposed at a Starrett shareholder meeting to approve the proposed transaction or related matters, or other responses in relation to the proposed transaction, should be made only on the basis of the information contained in ~~Starrett’s~~the ~~proxy~~Proxy ~~statement~~Statement. Shareholders may obtain a free copy of the ~~proxy~~Proxy ~~statement~~Statement and other documents Starrett files with the SEC (when available) through the website maintained by the SEC at www.sec.gov. Starrett makes available free of charge on its investor relations website at www.starrett.com copies of materials it files with, or furnishes to, the SEC.

The proposed transaction will be implemented solely pursuant to the Merger Agreement, which contains the full terms and conditions of the proposed transaction.

Participants in the Solicitation

Starrett and certain of its directors, executive officers and certain employees and other persons may be deemed to be participants in the solicitation of proxies from Starrett’s shareholders in connection with the proposed transaction. Security holders may obtain information regarding the names, affiliations and interests of Starrett’s directors and executive officers in Starrett’s definitive proxy statement on Schedule 14A for its 2023 Annual Meeting of Shareholders, which was filed with the SEC on September 29, 2023, in Starrett’s Current Report on Form 8-K filed with the SEC on November 8, 2023 and in Starrett’s Current Report on Form 8-K filed with the SEC on January 5, 2024. Additional information concerning the interests of Starrett’s participants in the solicitation, which may, in some cases, be different than those of Starrett’s shareholders generally, ~~will~~are be set forth in ~~Starrett’s proxy statement relating to~~ the ~~proposed~~Proxy ~~transaction~~Statement ~~when~~and itmay isbe ~~filed~~set ~~with~~forth ~~the~~in ~~SEC and~~ other materials that may be filed with the SEC in connection with the proposed transaction when they become available. These documents (when available) may be obtained free of charge from the SEC’s website at www.sec.gov and the investor relations page of the Starrett’s website at www.starrett.com.

Cautionary Statement Regarding Forward Looking Statements

This Current Report ~~on Form 8-K (this “Current Report”)~~ includes forward-looking statements that involve substantial risks and uncertainties. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. The words “anticipate”, “believe”, “contemplate”, “continue”, “could”, “estimate”, “expect”, “forecast”, “goal”, “intend”, “may”, “plan”, “potential”, “predict”, “project”, “should”, “target”, “will”, “would”, or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements include, without limitation, statements regarding the proposed transaction; prospective performance, future plans, events, expectations, performance, objectives and opportunities and the outlook for Starrett’s business; the commercial success of Starrett’s products; the expected timing of the completion of the transaction; the ability to complete the transaction considering the various closing conditions; and the accuracy of any assumptions underlying any of the foregoing. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and are cautioned not to place undue reliance on these forward-looking statements. Actual results or events may differ materially from those currently anticipated due to a number of factors. Factors that could cause future results to differ materially from such expectations include, but are not limited to: uncertainties as to the timing of the merger; uncertainties as to how many of Starrett’s shareholders will vote their stock in favor of the transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including circumstances requiring a party to pay the other party a termination fee pursuant to the Merger Agreement; the ability of the parties to consummate the proposed transaction on a timely basis or at all; the satisfaction of the conditions precedent to the consummation of the proposed transaction, including the ability to secure regulatory approvals and shareholder approval on the terms expected, at all or in a timely manner; the effects of the transaction (or the announcement or pendency thereof) on relationships with associates, customers, manufacturers, suppliers, employees (including the risks relating to the ability to retain or hire key personnel), other business partners or governmental entities; transaction costs; the risk that the merger will divert management’s attention from Starrett ’s ongoing business operations or otherwise disrupts Starrett’s ongoing business operations; changes in Starrett ’s businesses during the period between now and the closing; certain restrictions during the pendency of the proposed transaction that may impact Starrett’s ability to pursue certain business opportunities or strategic transactions; risks associated with litigation; and other factors as set forth in Starrett’s Annual Report on Form 10-K/A filed with the SEC on September 27, 2023 and Starrett’s Quarterly Reports on Form 10-Q filed with the SEC on February 16, 2024 and November 13, 2023, and other reports filed with the SEC. The forward-looking statements in this Current Report speak only as of the date of this Current Report. Starrett undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by applicable law. The information set forth herein speaks only as of the date hereof.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description of Exhibit
2.1†		Agreement and Plan of Merger, dated as of March 8, 2024, among the Company, Parent and Merger Sub.
4.1		Amendment No. 1 to Amended and Restated Rights Agreement, dated as of March 8, 2024, between the Company and Computershare Inc.
10.1		Amended and Restated Change in Control Agreement, dated March 8, 2024, between the Company and Douglas A. Starrett.
99.1		Joint Press Release, dated March 11, 2024, issued by the Company and Parent.
99.2		Customer Talking Points, dated March 11, 2024, issued by the Company.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

† Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		The L.S. Starrett Company
		(Registrant)
Date: March 11, 2024	By:	/s/John C. Tripp
Date: May 10, 2024	By:	/s/ John C. Tripp
	Name:	John C. Tripp
	Title:	Chief Financial Officer and Treasurer

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