SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[x] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
EASTERN
...............................................................................
(Name of Registrant as Specified In Its Charter)
...............................................................................
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee previously paid with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
.....................................................................
2) Form, Schedule or Registration Statement No.:
.....................................................................
3) Filing Party:
.....................................................................
4) Date Filed:
.....................................................................
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PROTECT THE LONG-TERM VALUE
OF YOUR INVESTMENT!
DO NOT BE MISLED BY JOHN DYSON'S CONTINUING EFFORTS TO SEIZE
CONTROL OF YOUR COMPANY.
PLEASE SIGN, DATE AND RETURN THE
ENCLOSED WHITE PROXY CARD TODAY!
==============================================================================
March 6, 1997
Dear Fellow Shareholder:
On behalf of the Board of Directors, we are writing to caution you about an
important recent development. John S. Dyson, the Dutchess County millionaire
politician, and his affiliates, including Millbrook Capital Management Inc. and
MMI Investments, L.L.C., are continuing their costly and disruptive efforts to
seize control of The Eastern Company by electing their hand-picked nominees to
Eastern's Board.
YOUR BOARD DOES NOT BELIEVE MR. DYSON IS ACTING IN THE BEST INTERESTS OF ALL
SHAREHOLDERS. WE STRONGLY URGE YOU TO SUPPORT YOUR BOARD'S EFFORTS TO BUILD
LONG-TERM SHAREHOLDER VALUE. PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE
PROXY CARD TODAY.
DYSON IS ACTING IN HIS OWN SELF-INTEREST, NOT YOURS
We believe that the Dyson nominees are plagued by fundamental conflicts of
interest. As you know, last July the Millbrook/Dyson group made a conditional
proposal to buy Eastern through a leveraged buyout, to be largely financed
through Eastern's own balance sheet. The Connecticut Superior Court described
the Millbrook proposal as a "highly leveraged transaction predicated on the loan
value of the target company."
<PAGE>
Your Board, after careful consideration, unanimously determined that the
Millbrook/Dyson proposal is NOT in the best interest of the shareholders. We
agree with the Dyson group's perception that the trading prices of Eastern's
stock "do not adequately reflect the potential value of Eastern's underlying
business and assets." We also believe that to put Eastern on the block now would
only reward the Dyson group by enabling them to bid for Eastern before the
benefits of Eastern's strategic plan can be realized. Such a sale would deprive
you and other shareholders of Eastern's long-term value.
You should also know that Dyson's group has not withdrawn the Millbrook LBO
proposal. Even though the Dyson nominees claim that they would support an offer
to buy Eastern whether or not it came from MMI, ask yourself whether the
interests of the Dyson nominees are the same as yours. Dyson owns Millbrook and
MMI. Doesn't he have a strong incentive to buy Eastern as cheaply as possible?
YOUR BOARD IS COMMITTED
TO BUILDING SHAREHOLDER VALUE
The directors of Eastern share your interests in building shareholder value.
They are substantial shareholders in the Company: including shares subject to
options, your directors and executive officers own more than 11% of Eastern's
shares.
To align directors' interests even more closely with yours, and to underscore
their confidence in Eastern's future, your directors have proposed, subject to
shareholder approval at the upcoming Annual Meeting, that all director fees be
paid in shares of Eastern stock, not cash.
Likewise, as part of its ongoing commitment to maximize long-term value, your
Board last year retained Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), a nationally recognized investment banking firm, to serve as the
company's financial adviser. DLJ has worked with Eastern to evaluate various
opportunities for Eastern's future growth. The Board has unanimously concluded
that the Company's strategic plan will build shareholder value.
EASTERN'S STRATEGIC PLAN IS
BUILDING SHAREHOLDER VALUE
Implementation of Eastern's strategic plan began to show results in 1996,
despite earnings being adversely affected by the cost of resisting Dyson's
lowball takeover attempt. The Company's earnings would have been more than 50%
higher, without those Dyson-related costs. As had been expected, Eastern was
also adversely affected by industry-wide declines in two of our major markets.
Nonetheless, after a difficult first quarter, Eastern was able in each of the
subsequent quarters to increase normal operating profits, before deducting the
Dyson-related costs.
<PAGE>
At the same time, 1996 was a year of positioning Eastern for growth in 1997 and
future years:
<PAGE>
* Acquiring Businesses. Our purchase of expansion fastener assets
from Excel Mining Systems has significantly strengthened our
position as the primary supplier of security fasteners for
underground mines.
* Expanding Existing Businesses. We expect our expansion into
contract casting will contribute substantially to improved
operating results in 1997. We now provide castings with
custom specifications to a wide variety of end users -- and this
business is growing.
* Introducing New Products. We build sales and income by
engineering new products. In 1996, new products included
handles, hinges, keyless and keyed locks, and the patented
rekeyable Warlock (R) -- to name just a few.
* Financial Strength. While building a solid platform for future
growth, we have also preserved our strong balance sheet -- the
asset the Dyson group has sought to use to finance its own
acquisition of your company in the Millbrook LBO. That financial
strength enables us to look at major strategic acquisition
possibilities.
DO NOT BE MISLED
We urge you not to be misled by the Dyson/MMI efforts to take control and sell
Eastern -- possibly to themselves -- at a depressed price. Discard any blue
proxy card you may receive from Dyson/MMI. Vote for the future of your
investment in Eastern by signing, dating and returning the enclosed WHITE proxy
card today.
We appreciate your continuing support, as we work to build value for all
shareholders.
On behalf of the Board of Directors,
Stedman G. Sweet
President & Chief Executive Officer
<PAGE>
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If your shares of Common Stock are held in the name
of a bank or brokerage firm, only that firm
can execute a proxy card on your behalf.
Please contact the person responsible for your account
and give instructions for a WHITE proxy card to be
voted FOR Proposals 1-3 and AGAINST Proposal 4.
If you have questions or need assistance in voting your
shares, please contact the firm assisting us in the
solicitation of proxies:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NY 10005
TOLL-FREE: 1-800-223-2064
BANKS & BROKERS CALL: 212-440-9800
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<PAGE>
ADDITIONAL INFORMATION WITH RESPECT TO PARTICIPANTS
The Company is required to provide certain additional information, in
addition to the information in the Company's February 28, 1997 proxy statement
(the "Proxy Statement"), with respect to "participants" (as such term is defined
in the proxy rules under the Securities Exchange Act), because of the
solicitation by the Dyson group. The Company's directors, including the
Company's nominees set forth in the Proxy Statement, and certain additional
persons who may solicit proxies on behalf of the Company may be deemed to be
participants.
In addition to solicitation by directors, officers and employees of the
Company, none of whom will receive additional compensation for such
solicitations, proxies may also be solicited by Martin C. Murrer, a Managing
Director of Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), the
Company's financial adviser (business address: 277 Park Avenue, New York, New
York 10172). DLJ is a company principally engaged in furnishing investment
banking advice for institutional and individual clients.
In the ordinary course of its business, DLJ engages in securities
trading and brokerage activities and may at any time hold long or short
positions, and may trade or otherwise effect transactions in Company securities.
As of March 5, 1997, DLJ was the direct or indirect beneficial owner of no
shares held for its own account or the accounts of customers under which it has
investment power. Neither DLJ nor Mr. Murrer admits being a "participant" as
such term is defined under Rule 14a-11(b) under the Exchange Act.
Except as set forth below, none of the participants has purchased or
sold or otherwise obtained or disposed of any securities of the Company within
the last two years. Except as set forth below or in the Proxy Statement, none of
the participants owns any securities of the Company of record but not
beneficially. To the best of the Company's knowledge, except as set forth below,
none of the participants has borrowed or otherwise obtained funds for the
purpose of acquiring or holding any securities of the Company purchased or sold
or otherwise obtained or disposed of within the last two years.
<TABLE>
<CAPTION>
Name Description of Transaction
---- --------------------------
<S> <C>
John W. Everts Acquired 213 shares on December 16, 1996
as payment for 4th quarter
1996 director fees;
acquired 11,250 shares on
February 25, 1997 through
exercise of option at
$12.50 per share using 50%
funds borrowed through a
margin account
Charles W. Henry Acquired 336 shares on December 16, 1996
as payment for 4th quarter
1996 director fees;
acquired 3,000 shares on
February 24, 1997 through
exercise of option at
$13.875 per share
Leonard F. Leganza Acquired 388 shares on December 16, 1996
as payment for 4th quarter 1996 director fees
Russell G. McMillen Acquired 336 shares on December 16, 1996
as payment for 4th quarter 1996 director fees
David C. Robinson Acquired 336 shares on December 16, 1996
as payment for 4th quarter
1996 director fees;
acquired 6,000 shares on
February 25, 1997 through
exercise of option at
$12.25 per share
Stedman G. Sweet Acquired 15,000 shares on February 26, 1997 through
exercise of option at $9.375 per share using borrowed funds
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Donald E. Whitmore, Jr. Acquired 3,000 shares on February 21, 1997 through
exercise of option at $9.08 per share using borrowed funds
Steven G. Sanelli Acquired 3,000 shares on February 27, 1997
through exercise of option
at $9.375 per share;
acquired 3,000 shares on
May 20, 1996 through
exercise of option at
$9.375 per share
Margaret Molnar Acquired 500 shares between March 1995 and
February 1997 through the
Company's savings and
investment plan
Raymond W. Jagert Acquired 677 shares between March 1995 and
February 1997 through the Company's savings and investment
plan
</TABLE>
The following employees of the Company may also solicit proxies:
<TABLE>
<CAPTION>
Name Present Position with the Company
---- ---------------------------------
<S> <C>
John Dibble Corporate Relations
Steven G. Sanelli Vice President
Margaret Molnar Controller, Eberhard Manufacturing Division
Raymond W. Jagert Controller, Illinois Lock Company Division
Amanda Gordon Executive Secretary
</TABLE>
Information about the share ownership of Eastern's directors and
executive officers is set forth in the Proxy Statement under the caption
"BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL SHAREHOLDERS." John Dibble is the
owner of 34,035 shares (including 32,242 shares held jointly with his wife);
Steven G. Sanelli is the owner of 31,029 shares; Margaret Molnar is the owner of
3,913 shares; Raymond W. Jagert is the owner of 5,706 shares; Amanda Gordon is
the owner of no shares. The business address of each person listed above is c/o
The Eastern Company, 112 Bridge Street, Naugatuck, CT 06770.
Certain contracts, agreements, arrangements and understandings between
the Company and directors of the Company with respect to securities of the
Company are described under the caption "EXECUTIVE COMPENSATION" in the Proxy
Statement. Certain arrangements between the Company and Messrs. Sweet and
Whitmore with respect to employment by the Company are described under the
caption "Employment Contracts, Termination of Employment and Change in Control
Arrangements" in the Proxy Statement.
Directors, officers and regular employees of the Company may solicit
proxies by mail, in person, by telephone or otherwise. The cost of this
solicitation of proxies will be borne by the Company. As of March 5, 1997, the
Company has incurred approximately $50,000 in expenses in connection with this
solicitation. The Company expects that it will spend an additional $250,000 in
connection with this solicitation.
SHARES OUTSTANDING
As of February 28, 1997, the record date for the Annual Meeting, there
were 2,764,164 outstanding shares of common stock of the Company. This number
supersedes the number appearing under the caption "GENERAL INFORMATION REGARDING
VOTING AT THE ANNUAL MEETING" in the Proxy Statement.
