The L.S. Starrett Company (the “Company”), Tru-Stone Technologies, Inc. (“Tru-Stone”), Starrett Kinemetric Engineering, Inc. (“Starrett Kinemetric”), Starrett Bytewise Development, Inc. (“Starrett Bytewise”, and together with L.S. Starrett, Tru-Stone, Starrett Kinemetric, each a “Borrower” and collectively the “Borrowers”), has entered into a material definitive agreement with HSBC Bank USA, National Association (“HSBC” or “Lender”) comprised of a $30 million revolving line of credit, a $12.1 million term loan and a $7 million capital expenditure draw down credit facility. The facilities are secured by a valid first-priority security interest on substantially all existing and future assets of the Company and its domestic subsidiaries. The Company believes that the agreement provides sufficient liquidity and flexibility to support the current and projected growth needs of the company.

The new credit facilities contain financial covenants with respect to a minimum fixed charge coverage ratio of 1.00, measured on a trailing twelve-month basis, for both the U.S. borrowing companies tested quarterly and the Consolidated L.S. Starrett Company tested semi-annually. The Loan and Security agreement also contains the customary affirmative and negative covenants, including limitations on indebtedness, liens, acquisitions, asset dispositions, fundamental corporate changes, excess pension contributions, and certain customary events of default. Upon the occurrence or continuation of an event of default, the Lender may terminate all commitments and facilities, and require the immediate payment of the entire unpaid principal balances, accrued interest, and all other obligations.