Document:

ex101das.htm

    EXHIBIT
10.1

    

    Change in Control
Agreement

    

    January
16, 2009

    

    Douglas
A. Starrett

    690
Spring Street

    Athol, MA
01331

     

    Dear
Doug:

     

    The L.S.
Starrett Company (the “Company”) considers it important and in the best
interests of its stockholders to foster the continuous employment of key
management personnel.  In this connection, the Board of Directors of
the Company (the “Board”) recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control of the Company may
exist and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of key
management personnel to the detriment of the Company and its
stockholders.

     

    The Board
has determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of certain members of the Company's
management, including you, to their assigned duties in the face of potentially
distracting circumstances arising from the possibility of a change in control of
the Company.

     

    In order
to motivate you to remain in the employ of the Company in your current
management position, the Company agrees that you shall receive certain benefits
set forth in this letter agreement (the “Agreement”) in the event of a Change in
Control of the Company.

     

    
      	
              1.  

            	
              Term
      of this Agreement.  The term of this Agreement (the
      “Term”) shall commence on the date hereof and shall continue in effect
      through June 30, 2010; provided, however, that on July 1, 2010 and each
      July 1 thereafter, the term of this Agreement shall automatically be
      extended for one additional year unless, not later than June 15 of such
      year, the Company shall have given written notice that it does not wish to
      extend this Agreement (provided that no such notice may be given during
      the pendency of a potential Change in Control of the Company); and,
      provided further, that if a Change in Control of the Company shall have
      occurred during the original or extended Term of this Agreement, this
      Agreement shall continue in effect for a period of not less than
      thirty-six (36) months beyond the month in which such Change in Control
      occurred. Notwithstanding the termination of your employment, any
      obligations hereunder which by their terms continue shall survive such
      termination. This Agreement does not constitute a contract of employment.
      Any termination of your employment by the Company or by you during the
      Term shall be communicated by a written notice of termination (“Notice of
      Termination”) to the other party hereto in accordance with Section 7. The
      “Date of Termination” shall mean the effective date of such termination as
      specified in the Notice of Termination; provided, however, that no such
      Notice of Termination shall specify an effective date more than one
      hundred eighty (180) days after the date of such Notice of Termination nor
      less than thirty (30) days.

            

    

     

    
      	
              2.  

            	
              Change
      in Control. For purposes of this Agreement, a “Change in Control”
      shall occur or be deemed to have occurred only if any of the following
      events occur:

            

    

     

    
      	
              (a)  

            	
              any
      “person”, as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other
      than the Company, any group of persons which includes you, any employee
      benefit plan of the Company, any entity owned directly or indirectly by
      the stockholders of the Company in substantially the same proportion as
      their ownership of stock of the Company, or any other person owning thirty
      (30) percent or more of the combined voting power of the company as of the
      date hereof) is or becomes the “beneficial owner” (as defined in Rule
      13d-3 under the Exchange Act), directly or indirectly, of securities of
      the Company representing in the aggregate thirty percent (30%) or more of
      the combined voting power of the Company's then outstanding voting
      securities or more than fifty percent (50%) of the total fair market value
      of the Company; or

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (b)  

            	
              a
      majority of the members of the Board (as of the date hereof, the
      “Incumbent Board”) is replaced during any 12 month period (except as a
      result of a transaction with any group of persons which includes you),
      provided that any person becoming a director subsequent to the date hereof
      whose election, or nomination for election by the Company's stockholders,
      was approved by a vote of at least a majority of the directors then
      comprising the Incumbent Board (other than an election or nomination of an
      individual whose initial assumption of office is in connection with an
      actual or threatened election contest relating to the election of the
      directors of the Company, as such terms are used in Rule 14a-11 of
      Regulation 14A under the Exchange Act) shall be, for purposes of this
      Agreement, considered as though such person were a member of the Incumbent
      Board; or

            

    

     

    
      	
              (c)  

            	
              the
      stockholders of the Company approve a merger or consolidation of the
      Company with any other entity, other than (i) a merger or consolidation
      which would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) more than thirty percent (30%) of the combined voting power of the
      voting securities of the Company or such surviving entity outstanding
      immediately after such merger or consolidation, or (ii) a merger or
      consolidation effected solely to implement a recapitalization of the
      Company (or similar transaction) in which no “person” (as hereinabove
      defined) increases the percentage held of the combined voting power of the
      Company's then outstanding securities, or (iii) a merger or consolidation
      with any affiliate of yours; or

            

    

     

    
      	
              (d)  

            	
              the
      consummation of transactions contemplated by a resolution of the Board
      whereby any person or persons (except a related person as provided in
      Section 1.409A-3(i)(5)(vii)(B) of the Treasury Regulations issued under
      Section 409A) acquire all or substantially all of the assets of the
      Company, whether in a single transaction or series of transactions during
      the 12 month period ending on the date of the most recent acquisition by
      such person or persons; or

            

    

     

    
      	
              (e)  

            	
              the
      stockholders of the Company approve a plan of complete liquidation of the
      Company or an agreement for the sale, lease, exchange or disposition by
      the Company of all or substantially all of the Company's
      assets.

            

    

     

    
      	
              3.  

            	
              Compensation
      and Benefits Upon a Change in
Control.

            

    

     

    
      	
              (a)  

            	
              Upon
      a Change in Control (a “Trigger Event”) and notwithstanding any change in
      your employment with the Company, but subject to the provisions of Section
      5, the Company will pay to you within thirty (30) days of the Trigger
      Event a lump sum amount equal to the aggregate
  of:

            

    

     

    
      	
              (i)  

            	
              three
      times your annual base salary at the rate in effect immediately prior to
      the Trigger Event (or such higher rate as may have been in effect within
      the ninety (90) days prior to any Notice of Termination);
    and

            

    

     

    
      	
              (ii)  

            	
              three
      times the annualized amount equal to the average annual cash bonus paid to
      (or accrued for) you by the Company during the three (3) full years
      preceding such Trigger Event.

            

    

     

    
      	
              (b)  

            	
              Immediately
      prior to a Change of Control, all of your then outstanding options to
      purchase common stock of the Company shall be accelerated so that they
      shall become immediately exercisable in full; provided, in the event of a
      Change of Control as a result of a tender offer, such options shall become
      fully exercisable in a timely manner such that you may participate in such
      tender offer at any stage.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (c)  

            	
              (i)
      For the period terminating thirty-six (36) months after the Trigger Event
      (the “Benefit Termination Date”), the Company shall maintain in full force
      and effect, for the continued benefit of you, your spouse and your
      dependents, all insured and self-insured employee medical, dental, and
      prescription drug plans in which you were eligible to participate
      immediately before the Trigger Event, provided that your continued
      participation is possible under such plans and you continue to pay the
      contribution amounts that the Company customarily charges employee
      participants in such plans for such coverage.  If and to the
      extent that your continued participation is NOT possible under one or more
      of such plans, you, your spouse and/or dependents may elect COBRA health
      care continuation coverage under that plan or those plans, provided that
      the Company shall pay the COBRA premium costs for such coverage, and if
      such COBRA coverage is not available or can only be provided for a period
      that terminates before the Benefit Termination Date, in each case for
      reasons other than discretionary acts by you, your spouse and/or
      dependents, then the Company shall pay you in a lump sum cash payment on
      the first day of each month during the period that begins on the date that
      such coverage is not available or cannot be provided and ends on the
      Benefit Termination Date, equal to the COBRA premium (or the full monthly
      premium cost, if no COBRA premium is prescribed) for
    coverage.

            

    

     

    (ii) If
your employment with the Company is terminated before the Benefit Termination
Date for any reason, the Company will pay to you within thirty (30) days of your
termination of employment a lump sum cash payment equal to the dollar amount
defined in paragraph (A) reduced by the dollar amount defined in paragraph (B)
below.

     

    
      	
              (A)  

            	
              The
      lump sum cash present value, determined as of the Benefit Termination Date
      using reasonable actuarial assumptions, of the accrued benefit payable to
      you at your normal retirement date in the form of a single life annuity
      under the Company’s pension plan as in effect on the Trigger Date,
      assuming that you are continuously employed by the Company through the
      Benefit Termination Date and receive compensation through that date at
      your rate of earnings in effect on the date of the Trigger
      Event.

            

    

     

    
      	
              (B)  

            	
              The
      lump sum cash present value, determined as of the date that your
      employment with the Company terminated using reasonable actuarial
      assumptions, of the accrued benefit payable to you at your normal
      retirement date in the form of a single life annuity under the Company’s
      pension plan.

            

    

     

    
      	
              (d)  

            	
              The
      Company shall maintain with a reputable carrier directors and officers
      liability coverage for your benefit with coverage amounts at least equal
      to those in place prior to the Trigger Event and on terms at least as
      favorable as the terms of such coverage prior to the Trigger
      Event.

            

    

     

    
      	
              (e)  

            	
              The
      Company hereby covenants and agrees that in the event of a Change of
      Control the Company and its successors and assigns will continue in effect
      any Plan (as hereinafter defined, excluding any equity compensation plan)
      in which you are participating at the time of the Change in Control of the
      Company (or Plans providing you with at least substantially similar
      benefits in the aggregate), and that it will not take any action, or fail
      to take any action, which would adversely affect your continued
      participation in any of such Plans on at least as favorable a basis to you
      as is the case on the date of the Change in Control or which would
      materially reduce your benefits in the future under any of such Plans or
      deprive you of any material benefit of such Plans enjoyed by you at the
      time of the Change in Control.

            

    

     

    
      	
              4.  

            	
              Taxes.

            

    

     

    
      	
              (a)  

            	
              All
      payments to be made to you under this Agreement will be subject to
      required withholding of federal, state and local income and employment
      taxes.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (i)  

            	
              Subject
      to the other provisions of this Section 4, in the event it shall be
      determined that any payment or distribution by the Company to you or for
      your benefit (whether paid or payable, distributed or distributable,
      including, without limitation, the acceleration of vesting of any equity
      compensation or other benefit or award, but determined without regard to
      any additional payments required under this subparagraph (i)) (each, a
      “Payment”) would be subject to the excise tax imposed by Section 4999 of
      the Internal Revenue Code of 1986, as amended (the “Code”), or any
      interest or penalties are incurred by you with respect to such excise tax
      (such excise tax, together with any such interest and penalties, are
      hereinafter collectively referred to as the “Excise Tax”), then you shall
      be entitled to receive an additional payment (a “Gross-Up Payment”) in an
      amount sufficient to pay the Excise Tax on the Payments plus any federal,
      state, or local income taxes, employment taxes, and any Excise Tax imposed
      upon the Gross-Up Payment.

            

    

     

    
      	
              (ii)  

            	
              Subject
      to the other provisions of this Section 4, all determinations required to
      be made under this Section 4, including whether and when a Gross-Up
      Payment is required and the amount of such Gross-Up Payment and the
      assumptions to be used in arriving at such determination, shall be made by
      a certified public accounting firm selected by the Company and reasonably
      acceptable to you (the “Accounting Firm”), which shall be retained to
      provide detailed supporting calculations both to the Company and you
      within 15 business days of the receipt of notice from you that there has
      been a Payment, or such earlier time as the Company
      requests.  If the Accounting Firm is serving as accountant or
      auditor for the individual, entity or group effecting the Change in
      Control, the Company shall have the right to appoint another nationally
      recognized accounting firm to make the determinations required hereunder
      (which accounting firm shall then be referred to as the Accounting Firm
      hereunder).  All fees and expenses of the Accounting Firm shall
      be paid solely by the Company.  Any Gross-Up Payment, as
      determined pursuant to this Section 4, shall be paid by the Company to you
      within five (5) days of the receipt of the Accounting Firm’s
      determination, but in no event later than December 31st of the year
      following the year in which the Excise Tax is remitted to the taxing
      authority.  Any determination by the Accounting Firm shall be
      binding upon the Company and you.  As a result of the
      uncertainty in the application of Section 4999 of the Code at the time of
      the initial determination by the Accounting Firm hereunder, it is possible
      that Gross-Up Payments which should have been made will not have been made
      by the Company (“Underpayment”), consistent with the calculations required
      to be made hereunder.  If the Company exhausts its remedies
      pursuant to subparagraph (i) of this Section 4 and you thereafter are
      required to pay an Excise Tax in an amount that exceeds the Gross-Up
      Payment received by you, the Accounting Firm shall determine the amount of
      the Underpayment that has occurred and any such Underpayment shall be
      promptly paid by the Company to or for your
  benefit.

            

    

     

    
      	
              (iii)  

            	
              You
      shall notify the Company in writing of any claim by the Internal Revenue
      Service that, if successful, would result in an
      Underpayment.  Such notification shall be given as soon as
      practicable but no later than ten (10) business days after you are
      informed in writing of such claim and shall apprise the Company of the
      nature of such claim and the date on which such claim is requested to be
      paid or appealed.  You shall not pay such claim prior to the
      expiration of the 30-day period following the date on which it gives such
      notice to the Company (or such shorter period ending on the date that any
      payment of taxes with respect to such claim is due).  If the
      Company notifies you in writing prior to the expiration of such period
      that it desires to contest such claim, you
  shall:

            

    

     

    
      	
              (A)  

            	
              give
      the Company any information reasonably requested by the Company relating
      to such claim;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (B)  

            	
              take
      such action in connection with contesting such claims as the Company shall
      reasonably request in writing from time to time, including, without
      limitation, accepting legal representation with respect to such claim by
      an attorney reasonably selected by the
Company;

            

    

     

    
      	
              (C)  

            	
              cooperate
      with the Company in good faith in order to effectively contest such claim;
      and

            

    

     

    
      	
              (D)  

            	
              permit
      the Company to participate in any proceedings relating to such
      claim;

            

    

     

    provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold you harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses.  Without limitation on the foregoing provisions of this
subparagraph (iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct you to pay the tax claimed and sue for a refund or to contest the claim
in any permissible manner, and you agree to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs you to pay such claim
and sue for a refund, the Company shall advance the amount of such payment to
you, and shall indemnify and hold you harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for your taxable year with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the Company’s control of the contest
shall be limited to issues with respect to the amount of the Gross-Up Payment,
and you shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.

     

    
      	
              (iv)  

            	
              If,
      after the receipt by you of an amount advanced by the Company pursuant to
      this Section 4, you become entitled to receive any refund with respect to
      such claim, you shall promptly pay to the Company the amount of such
      refund (together with any interest paid or credited thereon after taxes
      applicable thereto).

            

    

     

    
      	
              (v)  

            	
              Notwithstanding
      any other provision of this Section 4, the Company may, in its sole
      discretion, withhold and pay over to the Internal Revenue Service or any
      other applicable taxing authority, for your benefit, all or any portion of
      the Gross-Up Payment, and the Executive hereby consents to such
      withholding.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              5.  

            	
              Code
      Section 409A Legal Requirements.  This Agreement and the
      benefits provided hereunder are intended to be exempt from or to comply
      with the requirements of Section 409A of the Code and the Treasury
      Regulations and other applicable guidance issued by the Treasury
      Department or Internal Revenue Service thereunder (collectively, “Section
      409A”), and shall be interpreted and administered consistent with such
      intent.  To the extent required for compliance with the
      requirements of Section 409A, references in this Agreement to a
      termination of employment and similar or correlative terms shall mean a
      “separation of service” within the meaning of Section 409A. from the
      Company and all other corporations and trades or businesses, if any, that
      would be treated as a single "service recipient" with the Company under
      Section 409A.

            

    

     

    Notwithstanding
anything to the contrary in this Agreement, if you are a “specified employee” as
defined and applied in Section 409A of the Code as of the Date of Termination,
to the extent any payment under this Agreement constitutes deferred compensation
(after taking into account any applicable exemptions from Section 409A of the
Code) which is payable on account of your separation from service, and to the
extent required by Section 409A of the Code, no payments due under this
Agreement may be made until the earlier of: (i) the first day following the
sixth-month anniversary of your Date of Termination, or (ii) your date of death;
provided, however, that any payments delayed during this six-month period shall
be paid in the aggregate in a lump sum as soon as administratively practicable
following the sixth month anniversary of your Date of Termination.  If
you die on or after the Date of Termination and prior to the sixth month
anniversary of your Date of Termination, any amount delayed pursuant to this
Section 5 shall be paid to your estate or beneficiary, as applicable, within 30
days following the date of your death.   For purposes of Section
409A of the Code, each “payment” (as defined by Section 409A of the Code) made
under this Agreement shall be considered a “separate payment.”

     

    If either
party to this Agreement determines that this Agreement violates Section 409A of
the Code and that an amendment of this Agreement would avoid the imposition on
any person of additional taxes, penalties or interest under Section 409A of the
Code (a “Compliance Amendment”), then that party shall propose the terms of the
Compliance Amendment to the other party.  The parties shall then in
good faith negotiate the terms of any such proposed Compliance
Amendment.  If an agreement concerning the proposed Compliance
Amendment cannot be reached by the parties after the Company determines that a
reasonable period of time to consider the terms of the proposal has passed, then
the Company shall have the unilateral right to amend this Agreement to the
extent the Company deems such action necessary or advisable to avoid the
imposition on any person of additional taxes, penalties or interest under
Section 409A of the Code.  Any such Compliance Amendment shall be made
in a manner which, to the maximum extent the Company agrees or reasonably and in
good faith determines to be possible, retains the economic and tax benefits to
you hereunder while not increasing the cost to the Company of providing such
benefits to you.

     

    
      	
              6.  

            	
              Successors
      and Assigns; Binding
Agreement.

            

    

     

    
      	
              (a)  

            	
              The
      Company will require any successor (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all
      of the business or assets of the Company expressly to assume and agree to
      perform this Agreement to the same extent that the Company would be
      required to perform it if no such succession had taken place. Failure of
      the Company to obtain an assumption of this Agreement prior to the
      effectiveness of any succession shall be a breach of this Agreement and
      shall entitle you to compensation from the Company in the same amount and
      on the same terms as you would be entitled hereunder if you had been
      terminated without Cause. As used in this Agreement, “Company” shall mean
      the Company as defined above and any successor to its business or assets
      as aforesaid which assumes and agrees to perform this Agreement by
      operation of law, or otherwise.

            

    

     

    
      	
              (b)  

            	
              This
      Agreement, and the your rights and obligations hereunder, may not be
      assigned by you, nor may you pledge, encumber or anticipate any payments
      or benefits due hereunder, by operation of law or
    otherwise.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
Company may assign its rights, together with its obligations, hereunder: (i) to
any affiliate; or (ii) to a third party in connection with any sale, transfer or
other disposition of all or substantially all of any business to which your
services are then principally devoted; provided, however, that no
assignment pursuant to this paragraph shall relieve the Company from its
obligations hereunder to the extent the same are not timely discharged by such
assignee.

     

    
      	
              (c)  

            	
              This
      Agreement shall inure to the benefit of and be enforceable by your
      personal or legal representatives, executors, administrators, successors,
      heirs, distributees, devisees and legatees. If you should die while any
      amount would still be payable to you hereunder if you had continued to
      live, all such amounts, unless otherwise provided herein, shall be paid in
      accordance with the terms of this Agreement to your devisee, legatee or
      other designee or if there is no such designee, to your
      estate.

            

    

     

    
      	
              7.  

            	
              Notice.
      For purposes of this Agreement, notices and all other communications
      provided for in this Agreement shall be in writing and shall be duly given
      when delivered or when mailed by United States registered or certified
      mail, return receipt requested, postage prepaid, addressed to the
      President of the Company, at the Company's main office, and to you at the
      address shown above or to such other address as either the Company or you
      may have furnished to the other in writing in accordance herewith, except
      that notice of change of address shall be effective only upon
      receipt.

            

    

     

    
      	
              8.  

            	
              Miscellaneous.

            

    

     

    
      	
              (a)  

            	
              The
      invalidity or unenforceability of any provision of this Agreement shall
      not affect the validity or enforceability of any other provision of this
      Agreement, which shall remain in full force and
  effect.

            

    

     

    
      	
              (b)  

            	
              The
      validity, interpretation, construction and performance of this Agreement
      shall be governed by the laws of The Commonwealth of
      Massachusetts.

            

    

     

    
      	
              (c)  

            	
              This
      Agreement may be amended, modified, superseded, canceled, renewed or
      extended and the terms or covenants hereof may be waived, only by a
      written instrument executed by both of the parties hereto, or in the case
      of a waiver, by the party waiving compliance. The failure of either party
      at any time or times to require performance of any provision hereof shall
      in no manner affect the right at a later time to enforce the same. No
      waiver by either party of the breach of any term or covenant contained in
      this Agreement, whether by conduct or otherwise, in any one or more
      instances, shall be deemed to be, or construed as, a further or continuing
      waiver of any such breach, or a waiver of the breach of any other term or
      covenant contained in this
Agreement.

            

    

     

    
      	
              (d)  

            	
              This
      Agreement may be executed in several counterparts, each of which shall be
      deemed to be an original but all of which together will constitute one and
      the same instrument.

            

    

     

    
      	
              (e)  

            	
              Any
      payments provided for hereunder shall be paid net of any applicable
      withholding required under federal, state or local
  law.

            

    

     

    
      	
              (f)  

            	
              This
      Agreement replaces and terminates any prior agreement or understanding
      between you and the Company with respect to the subject matter
      hereof.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If this
letter sets forth our agreement on the subject matter hereof, kindly sign and
return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.

     

    

    Sincerely,

    

    THE L.S.
STARRETT COMPANY

    

    By: /s/ Randall J. Hylek

    Randall
J. Hylek

    Treasurer
and Chief Financial Officer

    

    

    

    Agreed to
this 16th day of January, 2009

    

    /s/
Douglas A. Starrett

    Douglas
A. Starrett

    

    Address:

    680
Spring Street

    Athol, MA
01331ex102rjhsfw.htm

    EXHIBIT
10.2

    

    Form of

    

    Change in Control
Agreement

    

    January
16, 2009

    

    [Name]

    [Address]

    

     

    Dear
_____________:

     

    The L.S.
Starrett Company (the “Company”) considers it important and in the best
interests of its stockholders to foster the continuous employment of key
management personnel.  In this connection, the Board of Directors of
the Company (the “Board”) recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control of the Company may
exist and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of key
management personnel to the detriment of the Company and its
stockholders.

     

    The Board
has determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of certain members of the Company's
management, including you, to their assigned duties in the face of potentially
distracting circumstances arising from the possibility of a change in control of
the Company.

     

    In order
to motivate you to remain in the employ of the Company in your current
management position, the Company agrees that you shall receive the benefits set
forth in this letter agreement (the “Agreement”) in the event your employment in
your current management position with the Company is terminated under the
circumstances described below subsequent to a Change in Control of the
Company.

     

    
      	
              1.  

            	
              Term
      of this Agreement.  The term of this Agreement (the
      “Term”) shall commence on the date hereof and shall continue in effect
      through June 30, 2010; provided, however, that on July 1, 2010 and each
      July 1 thereafter, the term of this Agreement shall automatically be
      extended for one additional year unless, not later than June 15 of such
      year, the Company shall have given written notice that it does not wish to
      extend this Agreement (provided that no such notice may be given during
      the pendency of a potential Change in Control of the Company); and,
      provided further, that if a Change in Control of the Company shall have
      occurred during the original or extended Term of this Agreement, this
      Agreement shall continue in effect for a period of not less than
      twenty-four (24) months beyond the month in which such Change in Control
      occurred. Notwithstanding the termination of your employment, any
      obligations hereunder which by their terms continue shall survive such
      termination. This Agreement does not constitute a contract of employment.
      Any termination of your employment by the Company or by you during the
      Term shall be communicated by a written notice of termination (“Notice of
      Termination”) to the other party hereto in accordance with Section 8. The
      “Date of Termination” shall mean the effective date of such termination as
      specified in the Notice of Termination; provided, however, that no such
      Notice of Termination shall specify an effective date more than one
      hundred eighty (180) days after the date of such Notice of Termination
      nor, except in the event of a termination for Cause or Good Reason, less
      than thirty (30) days.

            

    

     

    
      	
              2.  

            	
              Certain
      Definitions. As used herein, the following terms shall have the
      following respective meanings:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (a)  

            	
              Change
      in Control. For purposes of this Agreement, a “Change in Control”
      shall occur or be deemed to have occurred only if any of the following
      events occur:

            

    

     

    
      	
              (i)  

            	
              any
      “person”, as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other
      than the Company, any group of persons which includes you, any employee
      benefit plan of the Company, any entity owned directly or indirectly by
      the stockholders of the Company in substantially the same proportion as
      their ownership of stock of the Company, or any other person owning thirty
      (30) percent or more of the combined voting power of the company as of the
      date hereof) is or becomes the “beneficial owner” (as defined in Rule
      13d-3 under the Exchange Act), directly or indirectly, of securities of
      the Company representing in the aggregate thirty percent (30%) or more of
      the combined voting power of the Company's then outstanding voting
      securities or more than fifty percent (50%) of the total fair market value
      of the Company; or

            

    

     

    
      	
              (ii)  

            	
              a
      majority of the members of the Board (as of the date hereof, the
      “Incumbent Board”) is replaced during any 12 month period (except as a
      result of a transaction with any group of persons which includes you),
      provided that any person becoming a director subsequent to the date hereof
      whose election, or nomination for election by the Company's stockholders,
      was approved by a vote of at least a majority of the directors then
      comprising the Incumbent Board (other than an election or nomination of an
      individual whose initial assumption of office is in connection with an
      actual or threatened election contest relating to the election of the
      directors of the Company, as such terms are used in Rule 14a-11 of
      Regulation 14A under the Exchange Act) shall be, for purposes of this
      Agreement, considered as though such person were a member of the Incumbent
      Board; or

            

    

     

    
      	
              (iii)  

            	
              the
      stockholders of the Company approve a merger or consolidation of the
      Company with any other entity, other than (A) a merger or consolidation
      which would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) more than thirty percent (30%) of the combined voting power of the
      voting securities of the Company or such surviving entity outstanding
      immediately after such merger or consolidation, or (B) a merger or
      consolidation effected solely to implement a recapitalization of the
      Company (or similar transaction) in which no “person” (as hereinabove
      defined) increases the percentage held of the combined voting power of the
      Company's then outstanding securities, or (C) a merger or consolidation
      with any affiliate of yours; or

            

    

     

    
      	
              (iv)  

            	
              the
      consummation of transactions contemplated by a resolution of the Board
      whereby any person or persons (except a related person as provided in
      Section 1.409A-3(i)(5)(vii)(B) of the Treasury Regulations issued under
      Section 409A) acquire all or substantially all of the assets of the
      Company, whether in a single transaction or series of transactions during
      the 12 month period ending on the date of the most recent acquisition by
      such person or persons; or

            

    

     

    
      	
              (v)  

            	
              the
      stockholders of the Company approve a plan of complete liquidation of the
      Company or an agreement for the sale, lease, exchange or disposition by
      the Company of all or substantially all of the Company's
      assets.

            

    

     

    
      	
              (b)  

            	
              Cause.
      The following shall constitute cause for termination of your
      employment:

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (i)  

            	
              the
      material failure by you to perform your duties (other than any such
      failure resulting from your incapacity due to physical or mental illness)
      that, if capable of being cured, has not been cured within ten (10) days
      after notice to you setting forth in reasonable detail the manner in which
      you have not performed your duties;
or

            

    

     

    
      	
              (ii)  

            	
              conviction
      of or plea of guilty or nolo contendere to a
      felony or any other crime involving dishonesty, fraud or moral turpitude;
      or

            

    

     

    
      	
              (iii)  

            	
              deliberate
      dishonesty with respect to the Company or any of its affiliates;
      or

            

    

     

    
      	
              (iv)  

            	
              being
      found liable in any SEC or other civil or criminal securities law action,
      or the entry of any cease and desist order with respect to such action
      (regardless of whether or not you admit or deny liability);
    or

            

    

     

    
      	
              (v)  

            	
              breach
      of your fiduciary duties to the Company which may reasonably be expected
      to have a material adverse effect on the Company;
  or

            

    

     

    
      	
              (vi)  

            	
              obstructing
      or impeding, or failing to materially cooperate with, any investigation
      authorized by the Board or any governmental or self-regulatory entity;
      or

            

    

     

    
      	
              (vii)  

            	
              violation
      of any nondisclosure, nonsolicitation, non-hire, or noncompete agreement
      or policy that is applicable to you which violation may reasonably be
      expected to have a material adverse effect on the Company or its
      reputation; or

            

    

     

    
      	
              (viii)  

            	
              violation
      of any policy of the Company that is generally applicable to all employees
      or officers of the Company including, but not limited to, policies
      concerning insider trading, workplace violence, discrimination, or sexual
      harassment, or the Company’s code of conduct, that you know or reasonably
      should know could reasonably be expected to result in a material adverse
      effect on the Company or its reputation;
or

            

    

     

    
      	
              (ix)  

            	
              willful
      action or gross negligence that results in any restatement of earnings of
      the Company; or

            

    

     

    
      	
              (x)  

            	
              unlawful
      conduct pertaining to the Company or any of its affiliates involving a
      criminal act; material or conscious falsification or unauthorized
      disclosure of important records or reports; embezzlement or unauthorized
      conversion of property; violation of conflict of interest or vendor
      relations policies, willful disclosure of significant trade secrets or
      other information likely to be used to the detriment of the
      Company.

            

    

     

    
      	
              (c)  

            	
              Good
      Reason.  For purposes of this Agreement, “Good Reason”
      shall mean, without your written consent, the occurrence within ninety
      (90) days immediately prior to your giving the Company notice of the
      following circumstances, except that no such circumstance shall constitute
      "Good Reason" in the event that the Company remedies the condition within
      30 days of its receipt of such notice, and provided that your separation
      of service occurs within two years after the occurrence of such
      circumstance;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (i)  

            	
              a
      material decrease in the nature and scope of authority, powers, functions,
      and duties exercised by you immediately prior to a Change in Control,
      including, without limitation, any adverse change in your status or
      position as an employee of the Company as a result of a material
      diminution in your duties or responsibilities or the assignment to you of
      any duties or responsibilities which are materially inconsistent with such
      status or position(s) (other than any isolated and inadvertent failure by
      the Company that is cured promptly upon your giving notice), or any
      removal of you from or any failure to reappoint or reelect you to such
      position(s) (except in connection with the termination of your employment
      for Cause, Disability or Retirement or as a result of your death or by you
      other than for Good Reason); or

            

    

     

    
      	
              (ii)  

            	
              any
      reduction in your annual base salary from that in effect immediately prior
      to the Change in Control (other than a fifteen percent (15%) or less
      reduction in base salary imposed on all key management personnel who have
      an agreement with the Company similar to this Agreement);
    or

            

    

     

    
      	
              (iii)  

            	
              the
      Company requiring you to be based at an office that is both more than
      fifty (50) miles from where your office is located immediately prior to
      the Change in Control and further from your then current residence except
      for required travel on the Company’s business to an extent substantially
      consistent with the business travel obligations which you undertook on
      behalf of the Company prior to the Change in Control;
  or

            

    

     

    
      	
              (iv)  

            	
              any
      other breach or inaction that constitutes a material breach by the Company
      of this Agreement, including breach of the covenant in Section 4(e)
      below.

            

    

     

    
      	
              (d)  

            	
              Disability.
      If, as a result of incapacity due to physical or mental illness, you shall
      have been absent from the full-time performance of the essential functions
      of your position with the Company for three (3) consecutive months or for
      six (6) months in any twelve (12) consecutive month period and, within
      thirty (30) days after written Notice of Termination is given to you, you
      shall not have returned to the full-time performance of your duties, your
      employment may be terminated for
“Disability.”

            

    

     

    
      	
              (e)  

            	
              Plan.  For
      purposes of this Section 2, “Plan” shall mean any compensation plan,
      program or policy of the Company intended to benefit
      employees.

            

    

     

    
      	
              3.  

            	
              Change
      in Employment Status.

            

    

     

    
      	
              (a)  

            	
              Any
      termination of your employment by the Company or by you following a Change
      in Control during the Term shall be communicated by a Notice of
      Termination to the other party hereto in accordance with Section 8, which
      Notice of Termination shall specify the provisions of this Agreement, if
      any, upon which such termination is
based.

            

    

     

    
      	
              (b)  

            	
              You
      shall be entitled to the benefits provided in Section 4 if, and only if,
      the following event (a “Trigger Event”) occurs: a Change in Control shall
      have occurred during the Term and your employment with the Company is
      subsequently terminated or terminates for any reason within twenty-four
      (24) months after such Change in Control, unless such termination
      is:

            

    

     

    
      	
              (i)  

            	
              because
      of your death or Disability, or

            

    

     

    
      	
              (ii)  

            	
              by
      the Company for Cause, or

            

    

     

    
      	
              (iii)  

            	
              by
      you other than for Good Reason.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              4.  

            	
              Compensation
      and Benefits Upon
Termination.

            

    

     

    
      	
              (a)  

            	
              Subject
      to the provisions of Section 6, in the event of the occurrence of a
      Trigger Event, the Company will pay to you within thirty (30) days of the
      Date of Termination a lump sum amount equal to the aggregate
      of:

            

    

     

    
      	
              (i)  

            	
              one
      and one-half times your annual base salary at the rate in effect
      immediately prior to the Trigger Event (or such higher rate as may have
      been in effect within the ninety (90) days prior to the Notice of
      Termination); and

            

    

     

    
      	
              (ii)  

            	
              one
      and one-half times the annualized amount equal to the average annual cash
      bonus paid to (or accrued for) you by the Company during the
      three (3) full years preceding such Trigger Event or such shorter
      period of your employment divided by the lesser of three (3) or the period
      of your employment (expressed in years and any fraction
      thereof).

            

    

     

    
      	
              (b)  

            	
              (i)
      For the period terminating eighteen (18) months after the Trigger Event,
      (the “Benefit Termination Date”), the Company shall maintain in full force
      and effect, for the continued benefit of you, your spouse and your
      dependents, all insured and self-insured employee medical, dental, and
      prescription drug plans in which you were eligible to participate
      immediately before the Trigger Event, provided that your continued
      participation is possible under such plans and you continue to pay the
      contribution amounts that the Company customarily charges employee
      participants in such plans for such coverage.  If and to the
      extent that your continued participation is NOT possible under one or more
      of such plans, you, your spouse and/or dependents may elect COBRA health
      care continuation coverage under that plan or those plans, provided that
      the Company shall pay the COBRA premium costs for such coverage, and if
      such COBRA coverage is not available or can only be provided for a period
      that terminates before the Benefit Termination Date, in each case for
      reasons other than discretionary acts by you, your spouse and/or
      dependents, then the Company shall pay you in a lump sum cash payment on
      the first day of each month during the period that begins on the date that
      such coverage is not available or cannot be provided and ends on the
      Benefit Termination Date, equal to the COBRA premium (or the full monthly
      premium cost, if no COBRA premium is prescribed) for
    coverage.

            

    

     

    (ii)
Additionally, in the event of a Trigger Event, the Company will pay to you
within thirty (30) days of your Date of Termination a lump sum cash payment
equal to the dollar amount defined in paragraph (A) reduced by the dollar amount
defined in paragraph (B) below.

     

    
      	
              (A)  

            	
              The
      lump sum cash present value, determined as of the Benefit Termination Date
      using reasonable actuarial assumptions, of the accrued benefit payable to
      you at your normal retirement date in the form of a single life annuity
      under the Company’s pension plan as in effect on the Trigger Event,
      assuming that you are continuously employed by the Company through the
      Benefit Termination Date and receive compensation through that date at
      your rate of earnings in effect on the date of the Trigger
      Event.

            

    

     

    
      	
              (B)  

            	
              The
      lump sum cash present value, determined as of the date that your
      employment with the Company terminated using reasonable actuarial
      assumptions, of the accrued benefit payable to you at your normal
      retirement date in the form of a single life annuity under the Company’s
      pension plan.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (c)  

            	
              The
      Company shall maintain with a reputable carrier directors and officers
      liability coverage for your benefit with coverage amounts at least equal
      to those in place prior to the Trigger Event and on terms at least as
      favorable as the terms of such coverage prior to the Trigger
      Event.

            

    

     

    
      	
              (d)  

            	
              Immediately
      prior to a Change of Control, all of your then outstanding options to
      purchase common stock of the Company shall be accelerated so that they
      shall become immediately exercisable in full; provided, in the event of a
      Change of Control as a result of a tender offer, such options shall become
      fully exercisable in a timely manner such that you may participate in such
      tender offer at any stage.

            

    

     

    
      	
              (e)  

            	
              The
      Company hereby covenants and agrees that in the event of a Change of
      Control the Company and its successors and assigns will continue in effect
      any Plan (as hereinafter defined, excluding any equity compensation plan)
      in which you are participating at the time of the Change in Control of the
      Company (or Plans providing you with at least substantially similar
      benefits in the aggregate), and that it will not take any action, or fail
      to take any action, which would adversely affect your continued
      participation in any of such Plans on at least as favorable a basis to you
      as is the case on the date of the Change in Control or which would
      materially reduce your benefits in the future under any of such Plans or
      deprive you of any material benefit of such Plans enjoyed by you at the
      time of the Change in Control.

            

    

     

    
      	
              5.  

            	
              Taxes.

            

    

     

    
      	
              (a)  

            	
              All
      payments to be made to you under this Agreement will be subject to
      required withholding of federal, state and local income and employment
      taxes.

            

    

     

    
      	
              (i)  

            	
              Subject
      to the other provisions of this Section 5, in the event it shall be
      determined that any payment or distribution by the Company to you or for
      your benefit (whether paid or payable, distributed or distributable,
      including, without limitation, the acceleration of vesting of any equity
      compensation or other benefit or award, but determined without regard to
      any additional payments required under this subparagraph (i)) (each, a
      “Payment”) would be subject to the excise tax imposed by Section 4999 of
      the Internal Revenue Code of 1986, as amended (the “Code”), or any
      interest or penalties are incurred by you with respect to such excise tax
      (such excise tax, together with any such interest and penalties, are
      hereinafter collectively referred to as the “Excise Tax”), then you shall
      be entitled to receive an additional payment (a “Gross-Up Payment”) in an
      amount sufficient to pay the Excise Tax on the Payments plus any federal,
      state, or local income taxes, employment taxes, and any Excise Tax imposed
      upon the Gross-Up Payment.

            

    

     

    
      	
              (ii)  

            	
              Subject
      to the other provisions of this Section 5, all determinations required to
      be made under this Section 5, including whether and when a Gross-Up
      Payment is required and the amount of such Gross-Up Payment and the
      assumptions to be used in arriving at such determination, shall be made by
      a certified public accounting firm selected by the Company and reasonably
      acceptable to you (the “Accounting Firm”), which shall be retained to
      provide detailed supporting calculations both to the Company and you
      within 15 business days of the receipt of notice from you that there has
      been a Payment, or such earlier time as the Company
      requests.  If the Accounting Firm is serving as accountant or
      auditor for the individual, entity or group effecting the Change in
      Control, the Company shall have the right to appoint another nationally
      recognized accounting firm to make the determinations required hereunder
      (which accounting firm shall then be referred to as the Accounting Firm
      hereunder).  All fees and expenses of the Accounting Firm shall
      be paid solely by the Company.  Any Gross-Up Payment, as
      determined pursuant to this Section 5, shall be paid by the Company to you
      within five (5) days of the receipt of the Accounting Firm’s
      determination, but in no event later than December 31st of the year
      following the year in which the Excise Tax is remitted to the taxing
      authority.  Any determination by the Accounting Firm shall be
      binding upon the Company and you.  As a result of the
      uncertainty in the application of Section 4999 of the Code at the time of
      the initial determination by the Accounting Firm hereunder, it is possible
      that Gross-Up Payments which should have been made will not have been made
      by the Company (“Underpayment”), consistent with the calculations required
      to be made hereunder.  If the Company exhausts its remedies
      pursuant to subparagraph (i) of this Section 5 and you thereafter are
      required to pay an Excise Tax in an amount that exceeds the Gross-Up
      Payment received by you, the Accounting Firm shall determine the amount of
      the Underpayment that has occurred and any such Underpayment shall be
      promptly paid by the Company to or for your
  benefit.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (iii)  

            	
              You
      shall notify the Company in writing of any claim by the Internal Revenue
      Service that, if successful, would result in an
      Underpayment.  Such notification shall be given as soon as
      practicable but no later than ten (10) business days after you are
      informed in writing of such claim and shall apprise the Company of the
      nature of such claim and the date on which such claim is requested to be
      paid or appealed.  You shall not pay such claim prior to the
      expiration of the 30-day period following the date on which it gives such
      notice to the Company (or such shorter period ending on the date that any
      payment of taxes with respect to such claim is due).  If the
      Company notifies you in writing prior to the expiration of such period
      that it desires to contest such claim, you
  shall:

            

    

     

    
      	
              (A)  

            	
              give
      the Company any information reasonably requested by the Company relating
      to such claim;

            

    

     

    
      	
              (B)  

            	
              take
      such action in connection with contesting such claims as the Company shall
      reasonably request in writing from time to time, including, without
      limitation, accepting legal representation with respect to such claim by
      an attorney reasonably selected by the
Company;

            

    

     

    
      	
              (C)  

            	
              cooperate
      with the Company in good faith in order to effectively contest such claim;
      and

            

    

     

    
      	
              (D)  

            	
              permit
      the Company to participate in any proceedings relating to such
      claim;

            

    

     

    provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold you harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses.  Without limitation on the foregoing provisions of this
subparagraph (iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct you to pay the tax claimed and sue for a refund or to contest the claim
in any permissible manner, and you agree to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs you to pay such claim
and sue for a refund, the Company shall advance the amount of such payment to
you, and shall indemnify and hold you harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for your taxable year with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the Company’s control of the contest
shall be limited to issues with respect to the amount of the Gross-Up Payment,
and you shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (iv)  

            	
              If,
      after the receipt by you of an amount advanced by the Company pursuant to
      this Section 5, you become entitled to receive any refund with respect to
      such claim, you shall promptly pay to the Company the amount of such
      refund (together with any interest paid or credited thereon after taxes
      applicable thereto).

            

    

     

    
      	
              (v)  

            	
              Notwithstanding
      any other provision of this Section 5, the Company may, in its sole
      discretion, withhold and pay over to the Internal Revenue Service or any
      other applicable taxing authority, for your benefit, all or any portion of
      the Gross-Up Payment, and the Executive hereby consents to such
      withholding.

            

    

     

    
      	
              6.  

            	
              Code
      Section 409A Legal Requirements.  This Agreement and the
      benefits provided hereunder are intended to be exempt from or to comply
      with the requirements of Section 409A of the Code and the Treasury
      Regulations and other applicable guidance issued by the Treasury
      Department or Internal Revenue Service thereunder (collectively, “Section
      409A”), and shall be interpreted and administered consistent with such
      intent.  To the extent required for compliance with the
      requirements of Section 409A, references in this Agreement to a
      termination of employment and similar or correlative terms shall mean a
      “separation of service” within the meaning of Section 409A from the
      Company and all other corporations and trades or businesses, if any, that
      would be treated as a single "service recipient" with the Company under
      Section 409A.

            

    

     

    Notwithstanding
anything to the contrary in this Agreement, if you are a “specified employee” as
defined and applied in Section 409A of the Code as of the Date of Termination,
to the extent any payment under this Agreement constitutes deferred compensation
(after taking into account any applicable exemptions from Section 409A of the
Code) which is payable on account of your separation from service, and to the
extent required by Section 409A of the Code, no payments due under this
Agreement may be made until the earlier of: (i) the first day following the
sixth-month anniversary of your Date of Termination, or (ii) your date of death;
provided, however, that any payments delayed during this six-month period shall
be paid in the aggregate in a lump sum as soon as administratively practicable
following the sixth month anniversary of your Date of Termination.  If
you die on or after the Date of Termination and prior to the sixth month
anniversary of your Date of Termination, any amount delayed pursuant to this
Section 6 shall be paid to your estate or beneficiary, as applicable, within 30
days following the date of your death.   For purposes of Section
409A of the Code, each “payment” (as defined by Section 409A of the Code) made
under this Agreement shall be considered a “separate payment.”  For
the avoidance of doubt, all payments under this Agreement are to be paid no
later than the last day of the second taxable year following the taxable year of
your Date of Termination, in accordance with the separation pay exclusion
described in Section 1.409A-1(b)(9)(iii)(B) of the Treasury Regulations issued
under Section 409A.  In the event that the amount payable under this
Agreement exceeds the amount specified in Section 1.409A-1(b)(9)(iii)(A) of such
Regulations, the portion of such payment which does not constitute deferred
compensation will be paid to you in accordance with the timing rules of Section
4 of this Agreement, and only the portion of such payment which constitutes
deferred compensation (if any) will be subject to the 6-month delay described
above.

     

    If either
party to this Agreement determines that this Agreement violates Section 409A of
the Code and that an amendment of this Agreement would avoid the imposition on
any person of additional taxes, penalties or interest under Section 409A of the
Code (a “Compliance Amendment”), then that party shall propose the terms of the
Compliance Amendment to the other party.  The parties shall then in
good faith negotiate the terms of any such proposed Compliance
Amendment.  If an agreement concerning the proposed Compliance
Amendment cannot be reached by the parties after the Company determines that a
reasonable period of time to consider the terms of the proposal has passed, then
the Company shall have the unilateral right to amend this Agreement to the
extent the Company deems such action necessary or advisable to avoid the
imposition on any person of additional taxes, penalties or interest under
Section 409A of the Code.  Any such Compliance Amendment shall be made
in a manner which, to the maximum extent the Company agrees or reasonably and in
good faith determines to be possible, retains the economic and tax benefits to
you hereunder while not increasing the cost to the Company of providing such
benefits to you and shall not be a basis for a resignation by you for Good
Reason under this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              7.  

            	
              Successors
      and Assigns; Binding
Agreement.

            

    

     

    
      	
              (a)  

            	
              The
      Company will require any successor (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all
      of the business or assets of the Company expressly to assume and agree to
      perform this Agreement to the same extent that the Company would be
      required to perform it if no such succession had taken place. Failure of
      the Company to obtain an assumption of this Agreement prior to the
      effectiveness of any succession shall be a breach of this Agreement and
      shall entitle you to compensation from the Company in the same amount and
      on the same terms as you would be entitled hereunder if you had been
      terminated without Cause. As used in this Agreement, “Company” shall mean
      the Company as defined above and any successor to its business or assets
      as aforesaid which assumes and agrees to perform this Agreement by
      operation of law, or otherwise.

            

    

     

    
      	
              (b)  

            	
              This
      Agreement, and the your rights and obligations hereunder, may not be
      assigned by you, nor may you pledge, encumber or anticipate any payments
      or benefits due hereunder, by operation of law or
    otherwise.

            

    

     

    The
Company may assign its rights, together with its obligations, hereunder: (i) to
any affiliate; or (ii) to a third party in connection with any sale, transfer or
other disposition of all or substantially all of any business to which your
services are then principally devoted; provided, however, that no
assignment pursuant to this paragraph shall relieve the Company from its
obligations hereunder to the extent the same are not timely discharged by such
assignee.

     

    
      	
              (c)  

            	
              This
      Agreement shall inure to the benefit of and be enforceable by your
      personal or legal representatives, executors, administrators, successors,
      heirs, distributees, devisees and legatees. If you should die while any
      amount would still be payable to you hereunder if you had continued to
      live, all such amounts, unless otherwise provided herein, shall be paid in
      accordance with the terms of this Agreement to your devisee, legatee or
      other designee or if there is no such designee, to your
      estate.

            

    

     

    
      	
              8.  

            	
              Notice.
      For purposes of this Agreement, notices and all other communications
      provided for in this Agreement shall be in writing and shall be duly given
      when delivered or when mailed by United States registered or certified
      mail, return receipt requested, postage prepaid, addressed to the
      President of the Company, at the Company's main office, and to you at the
      address shown above or to such other address as either the Company or you
      may have furnished to the other in writing in accordance herewith, except
      that notice of change of address shall be effective only upon
      receipt.

            

    

     

    
      	
              9.  

            	
              Miscellaneous.

            

    

     

    
      	
              (a)  

            	
              The
      invalidity or unenforceability of any provision of this Agreement shall
      not affect the validity or enforceability of any other provision of this
      Agreement, which shall remain in full force and
  effect.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              (b)  

            	
              The
      validity, interpretation, construction and performance of this Agreement
      shall be governed by the laws of The Commonwealth of
      Massachusetts.

            

    

     

    
      	
              (c)  

            	
              This
      Agreement may be amended, modified, superseded, canceled, renewed or
      extended and the terms or covenants hereof may be waived, only by a
      written instrument executed by both of the parties hereto, or in the case
      of a waiver, by the party waiving compliance. The failure of either party
      at any time or times to require performance of any provision hereof shall
      in no manner affect the right at a later time to enforce the same. No
      waiver by either party of the breach of any term or covenant contained in
      this Agreement, whether by conduct or otherwise, in any one or more
      instances, shall be deemed to be, or construed as, a further or continuing
      waiver of any such breach, or a waiver of the breach of any other term or
      covenant contained in this
Agreement.

            

    

     

    
      	
              (d)  

            	
              This
      Agreement may be executed in several counterparts, each of which shall be
      deemed to be an original but all of which together will constitute one and
      the same instrument.

            

    

     

    
      	
              (e)  

            	
              Any
      payments provided for hereunder shall be paid net of any applicable
      withholding required under federal, state or local
  law.

            

    

     

    
      	
              (f)  

            	
              This
      Agreement replaces and terminates any prior agreement or understanding
      between you and the Company with respect to the subject matter
      hereof.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If this
letter sets forth our agreement on the subject matter hereof, kindly sign and
return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.

     

    

    Sincerely,

    

    THE L.S.
STARRETT COMPANY

    

    By:_________________________

    

    

    

    

    Agreed to
this 16th day of January, 2009

    

    ______________________________

    (Signature)

    ______________________________

    (Print
Name)

    Address

    _____________________________

    _____________________________

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