UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
The Eastern Company
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
276317 10 4
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(CUSIP Number)
Clay Lifflander
MMI Investments, L.L.C., RR1, Box 167D, Wing Road, Millbrook, NY 12545
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 16, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |X|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 26 Pages
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<PAGE>
SCHEDULE 13D
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CUSIP No. 276317 10 4 Page 2 of 26 Pages
----------- ------- --------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MMI Investments, L.L.C.
TIN 14-1790769
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
163,400
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
163,400
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
163,400
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.06%
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 26 Pages
<PAGE>
<PAGE>
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CUSIP No. 276317 10 4 Page 3 of 26 Pages
----------- --------- -----------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Millbrook Capital Management Inc.
TIN 13-3540644
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
163,400
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
163,400
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
163,400
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.06%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 3 of 26 Pages
<PAGE>
<PAGE>
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CUSIP No. 276317 10 4 Page 4 of 26 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John S. Dyson
SSN ###-##-####
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
163,400
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
163,400
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
163,400
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.06%
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14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 4 of 26 Pages
<PAGE>
<PAGE>
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CUSIP No. 276317 10 4 Page 5 of 26 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ernst Ohnell
SSN ###-##-####
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
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7 SOLE VOTING POWER
89,800
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
89,800
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
89,800
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.33%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 4 of 26 Pages
<PAGE>
<PAGE>
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CUSIP No. 276317 10 4 Page 6 of 26 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
B.W. Elliott Manufacturing Co.
TIN 15-0585760
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, BK, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
0
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 6 of 26 Pages
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<PAGE>
SCHEDULE 13D
Item 2. Identity and Background
Item 2 of Schedule 13D is amended in its entirety to read as
follows:
This statement is being filed by each of the following, who are
collectively referred to herein as the "Reporting Persons":
1. MMI Investments, L.L.C., a Delaware limited liability company
("MMI");
2. Millbrook Capital Management Inc., a New York corporation
("Millbrook");
3. John S. Dyson, sole stockholder, a Director and Chairman of
Millbrook;
4. Ernst Ohnell; and
5. B.W. Elliott Manufacturing Co., a New York corporation ("Elliott").
MMI, Millbrook and Mr. Dyson are collectively referred to herein as the
"Millbrook Reporting Persons".
The principal business address for each of the Millbrook Reporting
Persons is RR1, Box 167D, Wing Road, Millbrook, New York 12545.
MMI is a limited liability company organized under the Delaware
Limited Liability Company Act. MMI is primarily engaged in the business of
investing in securities.
Millbrook's principal business is to manage investments in publicly
traded securities as well as in private companies. Millbrook is the Manager
of MMI, and as such, it has the sole power to vote and dispose of investment
securities held by MMI. Millbrook's officers are John S. Dyson, Chairman;
Clay B. Lifflander, President; Jeffrey C. Gerstel, Chief Financial Officer;
and David H. Bova, Vice President (Messrs. Dyson, Lifflander, Gerstel and
Bova are referred to collectively herein as the "Millbrook Principals").
The Millbrook Principals are the directors of Millbrook. The Millbrook
Principals and Millbrook are also members of MMI. On July 16, 1996, Mr.
Lifflander revoked the proxy given by Mr. Dyson to vote the shares of capital
stock of Millbrook that Mr. Dyson owns. The principal business address for
the Millbrook Principals is RR1, Box 167D, Wing Road, Millbrook, New York
12545, and each of them is a United States citizen. The principal employment
for the Millbrook Principals is in their respective capacities with Millbrook
listed above.
Mr. Ohnell's address is Khakum Wood Road, Greenwich, Connecticut
06831. Mr. Ohnell's principal occupation is as Chief Executive Officer of
Communications Supply Corp., 260 West Avenue, Stamford, Connecticut 06902.
Mr. Ohnell is a United States citizen.
Elliott's principal business is the manufacturing of flexible shaft
and valve control products for industrial users. The principal business
address for Elliott is 37 Milford Street, Binghamton, New York 13904-1687.
Page 7 of 26 Pages
<PAGE>
The officer of Elliott is George M. Scherer, Chief Executive Officer.
Mr. Scherer's business address is 37 Milford Street, Binghamton, New York
13904-1687 and he is a United States citizen. In adition, Messrs. Scherer,
Liflander, Gerstel and Bova are the directors of Elliott (collectively, the
"Elliott Principals"). Millbrook owns 90% and Mr. Scherer owns 10% of the
outstanding capital stock of Elliott.
During the last five years, none of the Reporting Persons,
Millbrook Principals or Elliott Principals has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors, if any).
During the past five years, none of the Reporting Persons,
Millbrook Principals or Elliott Principals has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
Item 3 of Schedule 13D is hereby amended in its entirety to read as
follows:
The aggregate cost of the Shares beneficially owned by the
Millbrook Reporting Persons was approximately $1,991,257, including brokerage
commissions. All of these Shares were acquired by MMI using its working
capital and general margin financing to MMI from a broker or brokers pursuant
to standard margin agreements. The positions held in margin accounts are
pledged as collateral security for the repayment of debit balances in such
accounts.
From 1980 through 1991, Mr. Ohnell acquired the Shares reported as
owned by him for an aggregate purchase price of approximately $646,759,
including brokerage commissions. All of such Shares were purchased using the
personal funds of Mr. Ohnell.
The source of funds to be used in acquiring the Shares pursuant to
the Proposed Merger (as defined in Item 4) will be from working capital of
Elliott and from bank financing. The amount of funds to be used by Elliott
in acquiring the Shares will be approximately $40.5 million, plus retirement
of Eastern debt and expenses.
Item 4. Purpose of Transaction
Item 4 of Schedule 13D is hereby amended in its entirety to read as
follows:
MMI acquired Shares of the Company because MMI believes that
trading prices of the Shares do not adequately reflect the potential value of
the Company's underlying business and assets. MMI initially intended to work
with management to effectuate value enhancement strategies for all
stockholders. However, after meeting with management and studying the
Company's operations and industry, MMI determined that the best means to
maximize value for all stockholders is to effect an acquisition of the
Company.
Page 8 of 26 Pages
<PAGE>
On July 16, 1996, Millbrook sent a merger proposal set forth in
Exhibit 3 to the Chairman of the Company to have Elliott acquire all
outstanding Shares of the Company for $15 per Share in cash. The merger
proposal is subject, among other things, to the approval of the Company's
Board of Directors, a majority of the Company's public shareholders indicating
support for the transaction and other customary conditions for transactions
of this nature.
Millbrook anticipates that upon consummation of the transaction, a
wholly-owned direct or indirect subsidiary of Elliott will merge into the
Company (the "Proposed Merger"). As a result, the Company will become a
wholly-owned subsidiary of Elliott, and its present Board of Directors,
capitalization and dividend policy will be structured accordingly. Further,
the Shares will be delisted from trading on the American Stock Exchange and
will be eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended (the "Act").
Item 5. Interest in Securities of the Issuer
Item 5 of Schedule 13D is hereby amended in its entirety to read as
follows:
(a) As of July 16, 1996, MMI directly and beneficially owns (as
defined by Rule 13d-3 under the Act) 163,400 Shares, or 6.06% of the
2,696,284 Shares outstanding as of March 30, 1996 as reported by the Company
in its Quarterly Report on Form 10-Q for the quarter ended March 30, 1996.
As Manager of MMI, Millbrook has sole power to vote and dispose of
investments held by MMI; therefore, it beneficially owns (as defined by Rule
13d-3 of the Act) the Shares owned by MMI. Mr. Dyson, Chairman, a Director
and sole stockholder of Millbrook, has the power to direct Millbrook to vote
or dispose of the Shares held by MMI; therefore, he beneficially owns (as
defined by Rule 13d-3 of the Act) the Shares owned by MMI.
Mr. Ohnell beneficially owns 89,800 Shares, or 3.33% of the Shares
outstanding, including 52,050 Shares held directly by Mr. Ohnell, 9,300
Shares held by the Ohnell Family Foundation of which Mr. Ohnell is trustee,
and 25,450 Shares held by his emancipated adult children and 3,000 Shares
held by his wife with respect to which Mr. Ohnell holds an irrevocable proxy.
(b) As sole owner of the Shares that it holds, MMI has sole voting
and dispositive power over the 163,400 Shares that it owns directly. As
Manager of MMI, Millbrook has the sole power to direct the voting or
disposition of the Shares held by MMI; thus, Millbrook has sole voting and
dispositive power over such Shares. As Chairman, a Director and sole
stockholder of Millbrook, Mr. Dyson has the sole power to direct Millbrook on
the voting or disposition of Shares held by MMI; thus, Mr. Dyson also has
sole voting and dispositive power over such Shares.
Mr. Ohnell has sole voting and dispositive power over the 89,800
Shares that he beneficially owns.
Page 9 of 26 Pages
<PAGE>
(c) The Millbrook Reporting Persons became beneficial owners for
purposes of Rule 13d-3 of more than five percent of the Shares on April 29,
1996. See Exhibit 1 for a list of purchase transactions with respect to
Shares executed by MMI prior to the date of this report. All such purchases
were made on the open market through the facilities of the American Stock
Exchange.
Mr. Ohnell became a Reporting Person on July 16, 1996 upon
execution of the letter agreement contained in Exhibit 5 between Mr. Ohnell
and Millbrook relating to the Proposed Merger. Mr. Ohnell has not acquired
beneficial ownership of any Shares during the 60 day period prior to the date
hereof other than as a result of the execution on July 16, 1996 of the
proxies contained in Exhibits 6, 7 and 8 hereto.
(d) No other person has the right to receive or the power to
direct the receipt of dividends from, or proceeds from the sale of, any of
the Shares held by MMI and the 52,050 Shares directly owned by Mr. Ohnell.
The Ohnell Family Foundation and members of Mr. Ohnell's family have the
right to receive dividends or the proceeds from the sale of Shares held by
them.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Item 6 of Schedule 13D is hereby amended in its entirety to read as
follows:
On July 16, 1996, Millbrook and Mr. Ohnell executed a letter
agreement in which they agreed to cooperate in effecting the Proposed Merger.
Such letter agreement is Exhibit 5 hereto.
In addition, on July 16, 1996, Millbrook sent a letter to the
Chairman of the Company setting forth the Proposed Merger. Such letter is
Exhibit 3 hereto.
On July 16, 1996, each of Mr. Ohnell's wife and children executed
irrevocable proxies to Mr. Ohnell with respect to Shares held by them. Such
proxies are Exhibits 6, 7 and 8 hereto.
Except as otherwise set forth above or in Item 3, none of the
Reporting Persons, and to the knowledge of the Reporting Persons, none of the
Millbrook Principals, has any contract, arrangement, understanding or
relationship (legal or otherwise) with respect to any securities of the
Company, including but not limited to, transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, put
or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies.
Page 10 of 26 Pages
<PAGE>
Item 7. Material to Be Filed as Exhibits
Exhibit 1 Schedule of Transactions.
Exhibit 2 Amended Joint Filing Agreement dated July 16, 1996.
Exhibit 3 Letter to Chairman of the Company dated July 16, 1996.
Exhibit 4 Press Release dated July 17, 1996.
Exhibit 5 Letter Agreement by and between Millbrook and Mr. Ohnell dated
July 16, 1996.
Exhibit 6 Irrevocable Proxy dated July 16, 1996 of Patricia Ohnell.
Exhibit 7 Irrevocable Proxy dated July 16, 1996 of Carin M. Ohnell.
Exhibit 8 Irrevocable Proxy dated July 16, 1996 of Eileen H. Ohnell.
Page 11 of 26 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and
belief of the undersigned, each of the undersigned certifies that
the information set forth in this statement is true, complete and
correct.
MMI INVESTMENTS, L.L.C.
By: /s/ Clay B. Lifflander
------------------------------
Clay B. Lifflander
as President of Millbrook
Capital Management Inc.,
Manager of MMI Investments, L.L.C.
MILLBROOK CAPITAL MANAGEMENT
INC.
By: /s/ Clay B. Lifflander
------------------------------
Clay B. Lifflander
President
B.W. ELLIOTT MANUFACTURING CO.
By: /s/ George M. Scherer
--------------------------------
George M. Scherer
President
/s/ John S. Dyson
-------------------------------------
John S. Dyson
Individually
/s/ Ernst Ohnell
-------------------------------------
Ernst Ohnell
Individually
Dated: July 16, 1996
Page 12 of 26 Pages<PAGE>
EXHIBIT INDEX
Page
------
Exhibit 1 Schedule of Transactions. 14
Exhibit 2 Amended Joint Filing Agreement dated July 16, 1996. 15
Exhibit 3 Letter to Chairman of the Company dated July 16,
1996. 16
Exhibit 4 Press Release dated July 17, 1996. 20
Exhibit 5 Letter Agreement by and between Millbrook and Mr.
Ohnell dated July 16, 1996. 22
Exhibit 6 Irrevocable Proxy dated July 16, 1996 of Patricia
Ohnell. 24
Exhibit 7 Irrevocable Proxy dated July 16, 1996 of Carin
M. Ohnell. 25
Exhibit 8 Irrevocable Proxy dated July 16, 1996 of Eileen
H. Ohnell. 26
Page 13 of 26 Pages
<PAGE>
Exhibit 1
Schedule of Transactions
Purchases of Common Stock of The Eastern Company
by MMI Investments, L.L.C.
Price
Date Shares Per Share
2/5/96 17,300 $12.25
2/9/96 7,000 12.50
2/12/96 700 12.50
2/14/96 14,200 12.19
2/20/96 4,400 12.00
2/27/96 400 12.00
2/29/96 3,000 12.00
3/4/96 2,000 11.88
3/5/96 10,500 12.00
3/5/96 1,000 11.88
3/7/96 2,000 12.00
3/7/96 3,600 12.13
3/11/96 200 12.00
3/13/96 44,600 12.25
3/22/96 800 11.95
3/25/96 600 12.00
3/26/96 300 12.00
3/27/96 600 12.00
3/28/96 700 12.00
3/29/96 1,000 12.00
4/2/96 1,100 11.88
4/4/96 9,900 12.00
4/9/96 4,100 11.88
4/10/96 1,900 11.75
4/29/96 10,400 11.50
4/30/96 500 11.63
5/1/96 500 11.88
5/2/96 6,100 11.88
5/3/96 6,000 12.39
5/6/96 7,500 12.48
7/8/96 500 11.75
Page 14 of 26 Pages
<PAGE>
Exhibit 2
AMENDED JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f)(1)(iii) under the Securities
Exchange Act of 1934, as amended, the persons named below agree to
the joint filing on behalf of each of them of Amendment No. 1 to
the Statement on Schedule 13D dated July 16, 1996 (including
amendments thereto) with respect to the Common Stock of The Eastern
Company. This Amended Joint Filing Agreement shall be filed as an
Exhibit to such amended Statement.
MMI INVESTMENTS, L.L.C.
By:/s/ Clay B. Lifflander
---------------------------------
Clay B. Lifflander
as President of Millbrook
Capital Management Inc.,
Manager of MMI Investments, L.L.C.
MILLBROOK CAPITAL MANAGEMENT INC.
By:/s/ Clay B. Lifflander
-----------------------------------
Clay B. Lifflander
President
B.W. ELLIOTT MANUFACTURING CO.
By:/s/ George M. Scherer
-----------------------------------
George M. Scherer
President
/s/ John S. Dyson
--------------------------------------
John S. Dyson
Individually
/s/ Ernst Ohnell
--------------------------------------
Ernst Ohnell
Individually
Dated: July 16, 1996
Page 15 of 26 Pages
<PAGE>
Exhibit 3
[Millbrook Capital Management Inc. Letterhead]
July 16, 1996
Mr. Russell G. McMillen, Chairman
The Eastern Company
112 Bridge Street
Naugatuck, CT 06770
Dear Mr. McMillen:
We regret that we were not able to meet today so that
we could present the following proposal in person. As we have
previously indicated, MCM acquired shares in The Eastern
Company ("Eastern" or the "Company") because our analysis
indicated that such shares were undervalued. Over the past
several months, MCM has come to the view that the Company has
not capitalized on opportunities to grow its business and
increase shareholder value. For example, $100 invested in July
1994 in Eastern common stock is worth $85 today (including
dividends); a comparable investment in the S&P 500 index would
be worth over $150 today. Without a significant change of
direction, the Company is unlikely to maximize shareholder
value over the near or long term.
As we discussed with Mr. Sweet during our May 28th
meeting, MCM has a long and successful history of acquiring and
growing middle market companies. The companies that have been
acquired by MCM and its affiliates have averaged annual revenue
growth of approximately 15% and generated compound annual
returns of over 30% per annum. This has been of benefit to
employees, executives, communities, lenders and investors
involved with MCM's portfolio companies. MCM currently owns a
very successful manufacturing company in Binghamton, New York,
B.W. Elliott Manufacturing Company, Inc. Elliott was acquired
by MCM in 1992. Under MCM's ownership, Elliott has grown sales
and gross margin, has acquired another company and has
increased its employment in its community.
MCM is dedicated to achieving results for
shareholders and expects professional management to be able to
demonstrate results as well as a vision for the future. Since
Page 16 of 26 Pages<PAGE>
-2-
we are of this view, MCM, on behalf of Elliott, is proposing to
buy all of the shares of Eastern for $15.00 in cash. This
represents nearly a 30% premium to the average closing price
over the past thirty trading days. This would provide
Eastern's shareholders with the equivalent of many years
dividends and a return of their principal to invest in more
attractive opportunities.
We propose to effect this purchase through an all
cash merger of Eastern into a subsidiary of Elliott. Our offer
is subject to a customary merger agreement (term sheet
attached), shareholder approval, customary regulatory filings
and access to the books and records of Eastern for the purpose
of confirming the accuracy and completeness of the public
information. In the event that during such review, evidence of
additional value were provided, we would consider improving our
offer.
As a shareholder, we believe that given the foregoing
it is the Board's fiduciary duty to consider our offer
immediately. If you wish to discuss any aspect of our
proposal, we are prepared to meet at any time and to make our
legal counsel and financing sources available to speak with
you.
We are very excited about this opportunity and would
appreciate a response by Friday July 26th.
Sincerely,
/s/ Clay B. Lifflander
Clay B. Lifflander
President
cc: John W. Everets
Charles W. Henry
Ole K. Imset
Leonard F. Leganza
David C. Robinson
Stedman G. Sweet
Donald S. Tuttle, III
Donald E. Whitmore, Jr.
Attachment
Page 17 of 26 Pages<PAGE>
TERM SHEET
STRUCTURE * B.W. Elliott Manufacturing Co. ("Elliott")
will acquire all the outstanding stock of
The Eastern Co. ("Eastern") pursuant to a
merger of Eastern with a wholly-owned sub-
sidiary of Elliott (the "Acquisition").
* The Acquisition price will consist of
$15.00 per share in cash, for an aggregate
Acquisition price of $40,444,260.
DEFINITIVE * Elliott and Eastern will promptly begin
AGREEMENT negotiations toward a definitive agreement
containing the terms and conditions summa-
rized elsewhere in this Term Sheet and
other agreements, representations, warran-
ties and conditions appropriate for trans-
actions of this nature (the "Definitive
Agreement"). Elliott and its counsel will
be responsible for preparing the initial
draft of the Definitive Agreement, and the
parties intend to finalize and execute the
Definitive Agreement as quickly as pos-
sible.
* The Definitive Agreement will not be exe-
cuted until the due diligence investigation
to confirm the accuracy and completeness of
publicly available information has been
completed to the satisfaction of Elliott
and its lenders.
PRINCIPAL * Principal conditions to Closing to be
CONDITIONS specified in the Definitive Agreement will
include, among other things:
- Eastern shareholder approval;
- Redemption of any rights issued
pursuant to Eastern's rights
plan;
- Completion of all required fil-
ings and receipt of all required
regulatory and other approvals
Page 18 of 26 Pages
<PAGE>
-2-
(including, without limitation,
filings under the
Hart-Scott-Rodino Antitrust
Improvements Act;
- The absence of any material
adverse change in the business,
financial condition or prospects
of Eastern between March 30, 1996
and the Closing, except as other-
wise publicly disclosed by East-
ern as of July 16, 1996; and
- The absence of any pending or
threatened litigation regarding
the Definitive Agreement or the
Acquisition.
Page 19 of 26 Pages<PAGE>
Exhibit 4
MILLBROOK CAPITAL MANAGEMENT OFFERS TO ACQUIRE
THE EASTERN COMPANY FOR $15 PER SHARE
Millbrook, NY - July 16, 1996 - Millbrook Capital
Management ("MCM") today announced that it had delivered a
letter to the Board of Directors of The Eastern Company
("Eastern") (AMEX:EML) offering to acquire through a merger
100% of the Common Stock of Eastern, a 138 year old Naugatuck,
Connecticut-based manufacturer of locks and security hardware,
for $15 cash per share of Common Stock. This offer, which is
being made by MCM in conjunction with Ernst Ohnell, a long term
Eastern shareholder, represents a 30% premium over the average
closing stock price for the past thirty trading days. The
offer values Eastern at approximately $40 million.
In the letter to Eastern's Board, MCM said that the
proposal offers a very attractive opportunity for shareholders,
customers and employees. Since 1990, the Eastern Company's
revenues and earnings have been relatively flat resulting in
the failure to provide stockholders with a market return. For
example, $100 invested in Eastern Common Stock in July 1994 is
today worth $85 (including dividends), versus the same
investment in the S&P 500 index which would be worth over $150.
MCM believes that concentration on sales and marketing of new
and existing products, focused capital expenditures and well
thought-out strategies for the expansion of the Company's
brands will combine to create multiple opportunities that
should materially improve upon Eastern's earnings and cash
flow.
MCM intends to acquire Eastern through a subsidiary
of its 90% owned B.W. Elliott Manufacturing Co. ("Elliott")
unit. Elliott, based in Binghamton, New York, manufactures
flexible shaft and valve control products for industrial users.
MCM, based in Millbrook, NY, is an investment firm
owned by John S. Dyson. MCM specializes in the acquisition and
management of middle market companies. Until recently, Mr.
Dyson served as Deputy Mayor for Finance and Economic
Development of New York City. During his career, Mr. Dyson has
served New York State in several capacities, including Chairman
of the New York State Power Authority, Commissioner of the New
York State Department of Agriculture and Commissioner of the
New York State Department of Commerce. Mr. Dyson began his
Page 20 of 26 Pages<PAGE>
-2-
career with Dyson-Kissner-Moran, an investment firm founded by
his father. Ernst Ohnell is the founder and CEO of
Communications Supply Corp., a Connecticut based nationwide
distributor of data, phone and LAN cable and installation
hardware. Mr. Ohnell was named Southern New England
Entrepreneur of The Year in 1996 by Ernst & Young. The
investor group owns 253,200 shares of Eastern's Common Stock,
representing 9.39% of the Company's outstanding Common Stock.
In addition to the redemption of rights issued under
Eastern's shareholder rights plan, MCM's acquisition offer is
contingent only upon access to the book and records of Eastern
for the purpose of confirming publicly available information,
execution of a customary merger agreement, Eastern shareholder
approval and customary regulatory filings. MCM has offered to
meet with Eastern's Board of Directors to discuss the proposal
and has advised the Board in its letter that it would consider
improving the offer if management were able to provide MCM with
evidence of additional value not reflected in the public
filings.
For additional information or for a copy of MCM's
13-D, please contact John Nesbett of Lippert/Heilshorn
& Associates, Inc. at 212/838-3777.
Media contact: Andrew Lavin, A. Lavin Communications,
(212) 354-2266
Page 21 of 26 Pages
<PAGE>
Exhibit 5
[Millbrook Capital Management Inc. Letterhead]
July 16, 1996
Mr. Ernst Ohnell
Khakum Wood Road
Greenwich, CT 06831
Dear Nick:
The purpose of this letter is to set forth the terms
of the relationship between you and Millbrook Capital
Management Inc. ("MCM") with respect to shares of common stock
of The Eastern Company ("the Ohnell Shares") held by you, your
family and the Ohnell Family Foundation ("Ohnell Group"). You
and MCM hereby agree to work together with respect to MCM's
potential offer to acquire The Eastern Company.
You hereby agree on behalf of yourself and other
members of the Ohnell Group, that you will not without prior
notification to MCM, (i) acquire any additional shares of The
Eastern Company, (ii) sell any Ohnell Shares or grant any proxy
with respect to the Ohnell Shares to either The Eastern Company
or any other person, or (iii) enter into any other agreement
with respect to any Ohnell Shares with any other person.
You will have the right to contribute all or a
portion of the Ohnell Shares to the acquisition vehicle to be
utilized in the offer in exchange for an agreed percentage of
the common equity in such entity, subject to an agreed
valuation of such acquiring entity and an appropriate
shareholders' agreement. Any Ohnell Shares not contributed to
the acquisition vehicle or sold to MCM shall be voted by
members of the Ohnell Group in favor of the merger. You may
agree to serve as a Director of the acquiring entity.
MCM and you agree to indemnify each other with
respect to the accuracy and completeness of our public
disclosures. Further, unless and until either you agree to
invest in MCM's acquisition entity or you act in any way
inconsistent with MCM's objectives and directions, MCM agrees
to indemnify you and your affiliated shareholders against
liability arising out of your participation with MCM.
Page 22 of 26 Pages
<PAGE>
-2-
The terms of this agreement shall expire upon mutual
agreement or at either party's direction after September 30,
1996.
Please indicate your acceptance of the foregoing by
countersigning below.
Sincerely,
/s/ Clay B. Lifflander
Clay B. Lifflander
President
Accepted and Agreed:
/s/ Ernst Ohnell
- ------------------------------
Ernst Ohnell, individually and
on behalf of the Ohnell Group
Page 23 of 26 Pages
<PAGE>
Exhibit 6
THE EASTERN COMPANY
PROXY
KNOW ALL MEN BY THESE PRESENTS THAT I, PATRICIA OHNELL, am
the holder of 3,000 shares of Common Stock of The Eastern Com-
pany, and that I hereby constitute and appoint ERNST OHNELL my
true and lawful agent and proxy, to attend all meeting of the
shareholders of The Eastern Company, or any continuations or
adjournments thereof, with full power to vote for and act for
me in the same manner, to the same extent, and with the same
effect that I could if I were personally present.
I hereby represent that I will not sell, assign or hypoth-
ecate such shares of Common Stock without the prior written
consent of ERNST OHNELL.
Dated: July 16, 1996
/s/ Patricia Ohnell
-----------------------
Patricia Ohnell
Acknowledged and accepted by:
/s/ Ernst Ohnell
- --------------------------
Ernst Ohnell
Witnessed by:
/s/ Clay B. Lifflander
- --------------------------
Page 24 of 26 Pages
<PAGE>
Exhibit 7
THE EASTERN COMPANY
PROXY
KNOW ALL MEN BY THESE PRESENTS THAT I, CARIN M. OHNELL, am
the holder of 12,850 shares of Common Stock of The Eastern Com-
pany, and that I hereby constitute and appoint ERNST OHNELL my
true and lawful agent and proxy, to attend all meeting of the
shareholders of The Eastern Company, or any continuations or
adjournments thereof, with full power to vote for and act for
me in the same manner, to the same extent, and with the same
effect that I could if I were personally present.
I hereby represent that I will not sell, assign or hypoth-
ecate such shares of Common Stock without the prior written
consent of ERNST OHNELL.
Dated: July 16, 1996
/s/ Carin M. Ohnell
-------------------------
Carin M. Ohnell
Acknowledged and accepted by:
/s/ Ernst Ohnell
- ----------------------------
Ernst Ohnell
Witnessed by:
/s/ Clay B. Lifflander
- -----------------------------
Page 25 of 26 Pages
<PAGE>
Exhibit 8
THE EASTERN COMPANY
PROXY
KNOW ALL MEN BY THESE PRESENTS THAT I, EILEEN H. OHNELL,
am the holder of 12,600 shares of Common Stock of The Eastern
Company, and that I hereby constitute and appoint ERNST OHNELL
my true and lawful agent and proxy, to attend all meeting of
the shareholders of The Eastern Company, or any continuations
or adjournments thereof, with full power to vote for and act
for me in the same manner, to the same extent, and with the
same effect that I could if I were personally present.
I hereby represent that I will not sell, assign or hypoth-
ecate such shares of Common Stock without the prior written
consent of ERNST OHNELL.
Dated: July 16, 1996
/s/ Eileen H. Ohnell
-------------------------
Eileen H. Ohnell
Acknowledged and accepted by:
/s/ Ernst Ohnell
- ----------------------------
Ernst Ohnell
Witnessed by:
/s/ Clay B. Lifflander
- ----------------------------
Page 26 of 26 Pages
