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the SEC, the New York Stock Exchange and the Company initial reports of ownership and reports of changes in ownership of such securities. Based on information provided to the Company by the individual officers and directors, the Company believes that all such reports were timely filed in fiscal 2012 by such directors and officers.


II. APPROVAL OF THE L.S. STARRETT COMPANY 2012 EMPLOYEES’ STOCK PURCHASE PLAN The approval of The L.S. Starrett Company Employees’ Stock Purchase Plan is proposed by the Board of


Directors. The Board adopted the 2012 Plan on June 6, 2012 subject to stockholder approval. The Company proposes to offer its eligible employees rights to subscribe for up to 500,000 shares of its Common Stock over a five year period commencing October 17, 2012 in accordance with the 2012 Plan. Like previous plans that have been in effect for many years, the primary purpose of the 2012 Plan is to provide a convenient means for eligible employees to acquire an interest in the future of the Company by purchasing its Common Stock at an option price. The 2012 Plan contains substantially the same operative provisions as the 2007 Plan and was adopted by the Board on June 6, 2012. The 2012 Plan is attached to this Proxy Statement as Exhibit I.


The 2012 Plan provides that the options may cover shares of Class A Stock or and, to such extent (if any) as


the Board of may determine consistent with the purposes of the 2012 Plan, Class B Stock. The principal difference between the Class A Stock and the Class B Stock is their respective voting rights, as described above on page 4. Class B Stock is otherwise identical to the Class A Stock except (i) that it is generally non-transferable except to lineal descendants, (ii) cannot receive more dividends per share than the Class A Stock and (iii) can be converted to Class A Stock at any time. The 2012 Plan will expire on October 18, 2017, and no options under that plan may be granted thereafter. The 2012 Plan will give new employees an opportunity to participate in the success of the Company and allow present employee stockholders to invest further if they so desire. The Company feels that a further financial interest of this type on the part of those who work in the Company and its subsidiaries gives it an added edge that makes a difference in Company performance.


Since October 3, 2007, employees have been granted options for 257,157 shares under the 2007 Plan,


including options for 112,197 shares which were canceled or terminated or which expired unexercised through June 30, 2012. From October 3, 2007 through July 31, 2012, employees purchased 81,951shares of Common Stock under the 2002 Employee Stock Purchase Plan (the “2002 Plan”) and the 2007 Plan, and in this period officers and directors purchased 13,902 shares under the 2002 Plan and the 2007 Plan. During this period, employees purchased 32,293 shares of Common Stock under the 1952 Plan and officers and directors purchased 300 shares under the 1952 Plan.


The 2012 Plan is intended to qualify under the provisions of Section 423 of the Internal Revenue Code as an


“employee stock purchase plan,” which requires that the 2012 Plan be approved by the holders of the Company’s Common Stock.


The principal features of the 2012 Plan and its tax consequences are described below under separate headings.


A. Principal Features of the Plan Scope of the Plan. A total of not more than 500,000 authorized but unissued shares of Class A Stock or


Class B Stock of the Company may be issued under the 2012 Plan, and the Company, from time to time over the next five years, may grant options to its employees and the employees of designated subsidiaries to purchase these shares.


Eligible Employees. Each employee of the Company (and of its subsidiaries designated to participate in the


2012 Plan) having at least six months of continuous service on the date of grant of an option will be eligible to participate in the 2012 Plan. However, directors of the Company or of a subsidiary who are not employees of the Company or of a subsidiary and employees owning or deemed to own 5% or more of the Common Stock are not eligible to participate.


23 A20


Proxy


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