As filed with the Securities and Exchange Commission on February 7, 1997.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE EASTERN COMPANY
(Exact name of registrant as specified in its charter)
Connecticut 06-0330020
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
112 Bridge Street, Naugatuck, Connecticut 06770
(Address of principal executive offices) (Zip code)
THE EASTERN COMPANY DIRECTORS FEE PROGRAM
(Full title of the plan)
Richard L. Emerson, Esq.
John V. Galiette, Esq.
Gager & Peterson
One Exchange Place
P.O. Box 2480
Waterbury, Connecticut 06722-2480
(203) 597-5100
(Name, address, including zip code, and telephone number,
including area code of agents for service)
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed maximum
securities Amount maximum offering aggregate Amount of
to be to be price offering registration
registered registered (1) per share (1) price (1) fee (2)
Common stock 75,000 $ 12.6875 $951,563 $288.35
(1) These amounts have been estimated solely for the purpose of
calculating the registration fee. Pursuant to Rule 457(c) and (h) under the
Securities Act of 1933, as amended, these amounts have been computed on the
basis of the exercise price of options, where known, and where such exercise
price is not known or restricted stock has been awarded, on the basis of the
average of the bid and ask prices of the Registrant's Common Stock as traded
on the American Stock Exchange.
(2) The registration fee equals one thirty-third of one percent of
$12.6875, the average of the bid and ask prices of the Registrant's Common
Stock on February 6, 1997, multiplied by 75,000, a good faith estimate of
the aggregate number of shares of Common Stock of the Registrant to be issued
pursuant to the Program.
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents which have been filed by The Eastern
Company, a Connecticut corporation (the "Registrant"), with the
Securities and Exchange Commission (the "Commission") are
incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for
the fiscal year ended December 30, 1995.
(b) The Registrant's Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 30, 1996, June 29, 1996 and
September 28, 1996.
(c) The description of the Registrant's Common Stock
contained on pages 17 and 18 of the Registrant's Form S-8,
Registration No. 33-29452, relating to The Eastern Company
Incentive Stock Option Plan and The Eastern Company 1989
Executive Stock Incentive Plan filed pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), and any
amendments updating such description filed with the Commission.
(d) The description of the Registrant's Common Stock
contained in the Registrant's registration statement filed
pursuant to Section 12(b) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and any amendments updating such
description filed with the Commission.
All documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold, or which
deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing of such
documents. Any statement contained in the documents incorporated
or deemed incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in
any other subsequently filed document which also is incorporated
or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
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Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The consolidated financial statements of The Eastern Company
incorporated by reference in this Registration Statement have
been audited by Ernst & Young LLP, independent auditors, to the
extent indicated in their report thereon which is also
incorporated by reference herein. Such financial statements have
been incorporated herein by reference in reliance on such report
given on the authority of such firm as experts in accounting and
auditing.
The validity of the issuance of the shares of common stock
offered hereby will be passed upon for the Registrant by Gager &
Peterson, Waterbury, Connecticut.
Item 6. Indemnification of Directors and Officers.
Section 33-370 et seq. of the Connecticut General Statutes
provides for permissive indemnification, mandatory
indemnification and court-ordered indemnification of directors.
(A) A corporation may indemnify a director against
liability incurred in a pending, threatened or completed action,
suit or proceeding if: (1) he conducted himself in good faith;
and (2) he reasonably believed (a) in the case of conduct in his
official capacity with the corporation, that his conduct was in
its best interests, and (b) in all other cases, that his conduct
was at least not opposed to its best interests; and (3) in the
case of any criminal proceeding, that he had no reasonable cause
to believe that his conduct was unlawful.
A corporation may not indemnify a director unless a
determination has been made that indemnification of the director
is permissible because the director has met the applicable
standard of conduct. This determination must be made either:
(1) by a majority vote of the members of the board of directors
who are not parties to the proceeding; or (2) if a quorum cannot
be obtained, by a majority vote of a committee which is composed
of two or more directors who are not parties to the proceeding
and which is designated by vote of the directors who are not
parties to the proceeding; or (3) by special legal counsel
selected by the directors or a committee of directors who are not
parties to the proceeding (or by the full board if a quorum of
directors not involved in the proceeding cannot be obtained); or
(4) by vote of the shareholders (although shares owned by
directors who are parties to the proceeding cannot vote).
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Notwithstanding the above, however, a corporation may not
indemnify a director: (1) in connection with a proceeding by or
in the right of the corporation if the director was adjudged
liable to the corporation; or (2) in connection with any other
proceeding charging improper personal benefit to him, whether or
not involving action in his official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly
received by him.
Any indemnification permitted in connection with a
proceeding by or in the right of the corporation is limited to
reasonable expenses incurred by the director in connection with
the proceeding. A corporation may advance reasonable expenses
incurred by a director in connection with a proceeding if: (1)
the director furnishes the corporation with a written affirmation
of his good faith belief that he has met the standard of conduct
for receiving indemnification; (2) the director furnishes the
corporation with a written undertaking to repay any advances if
it is ultimately determined that he did not meet the standard of
conduct; and (3) the corporation determines that the facts then
known do not preclude indemnification.
(B) Unless limited by its article of incorporation, a
corporation shall indemnify a director who was wholly successful,
on the merits or otherwise, in the defense of any proceeding
against reasonable expenses incurred by him in connection with
the proceeding.
(C) Unless a corporation's articles of incorporation
provide otherwise, a court may order a corporation to indemnify a
director if the director applies to the court for indemnification
and the court determines that: (1) the director is entitled to
mandatory indemnification; or (2) the director is fairly and
reasonably entitled to indemnification in view of all of the
relevant circumstances, whether or not he met the standard of
conduct for permissive indemnification or was adjudged liable to
the corporation. However, if he was adjudged liable to the
corporation, his indemnification will be limited to only the
reasonable expenses incurred.
The rules which apply above relating to the indemnification
of directors also apply to officers who are not directors of the
corporation. In addition, a corporation may indemnify and
advance expenses to an officer, employee or agent who is not a
director to the extent, consistent with public policy, that is
permitted by its articles of incorporation, bylaws, general or
specific action of its board of directors, or contract.
Article Tenth of the Registrant's certificate of
incorporation and Section 33-636(b)(4) of the Connecticut General
Statutes limit the personal liability of the Registrant's
directors to the Registrant or its shareholders for monetary
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damages for any failure on the part of the directors to exercise
the requisite degree of care in fulfilling their duties and
responsibilities in their capacity as directors. However, the
protection does not extend to acts or omissions of the directors
that involve a knowing and culpable violation of law, enable the
director or an associate to receive an improper personal economic
gain, show a lack of good faith and a conscious disregard for the
duty of the director of the corporation under circumstances in
which the director was aware that his conduct or omission created
an unjustifiable risk of serious injury to the corporation,
constitute a sustained and unexcused pattern of inattention
amounting to an abdication of the director's duty to the
corporation, or involve unlawful distributions to the director.
The Registrant's by-laws also require the indemnification of
the Registrant's directors and officers. Article VII, Section 7
of the by-laws provides that each director and officer of the
Registrant will be indemnified against losses incurred by him
with respect to any action, suit or proceeding to which he is
made a party by reason of his being a director or officer, unless
he is adjudged in such action, suit or proceeding to be liable
for his own misconduct in the performance of his duty as such
director or officer. This right of indemnification is in
addition to any other such rights to which the director or
officer may, as a matter of law, be entitled.
The Registrant has also obtained directors' and officers'
liability insurance, the effect of which is to indemnify the
directors and officers of the Registrant against certain damages
and expenses because of certain claims made against them which
are caused by their negligent act, error or omission.
Item 7. Exemption from Registration Claimed.
The Registrant claims that the restricted securities to be
reoffered or resold pursuant to this registration statement are
exempt from registration under Section 4(2) of the Securities Act
of 1933, as amended, because they were issued in an offering to a
limited number of purchasers that did not involve a public
offering.
Item 8. Exhibits.
The following exhibits are filed as part of this
Registration Statement:
4(a) The Eastern Company Directors Fee Program
4(b) The Registrant's restated certificate of
incorporation dated August 14, 1991, and the Registrant's amended
and restated By-laws dated February 13, 1991, are incorporated by
reference to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991 and the Registrant's Form 8-K
filed on February 13, 1991.
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4(c) Letter to all shareholders of the Registrant dated
September 16, 1991 describing the Registrant's redemption of
shareholder purchase rights dated August 29, 1986 and the
issuance of a new purchase rights dividend distribution, and the
"Summary of Rights to Purchase Common Stock" as enclosed with
said letter, are incorporated by reference to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 28,
1991.
4(d) Rights Agreement entered into between the
Registrant and The First National Bank of Boston, dated September
16, 1991, incorporated by reference in the Registrant's Form 8-K
filed on September 16, 1991.
4(e) First Amendment dated November 11, 1992 to the
Rights Agreement dated as of September 16, 1991 between the
Registrant and The First National Bank of Boston, incorporated by
reference in the Registrant's Form 10-K for the fiscal year ended
January 2, 1993.
5 Opinion of Gager & Peterson as to the legality of
the securities being registered.
23(a) Consent of Gager & Peterson. (Reference is made to
the Opinion of Gager & Peterson filed as Exhibit 5.)
23(b) Consent of Independent Auditors
24 Power of Attorney (included in signature page to
this Registration Statement).
99(1) Resale S-3-type prospectus filed with this
Registration Statement on Form S-8 in accordance with General
Instruction C of Form S-8.
99(2) The Registrant's Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 is incorporated herein by
reference.
99(3) The Registrant's Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 30, 1996, June 29, 1996 and
September 28, 1996 are incorporated herein by reference.
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99(4) Notice of the 1996 Annual Meeting of Shareholders
and Proxy Statement of the Registrant dated March 22, 1996 are
incorporated herein by reference.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933 (the "Securities
Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information
with respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (ii) shall not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that,
for the purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act and each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions or otherwise, the Registrant has been
advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
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SIGNATURES
The Registrant. Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Naugatuck,
State of Connecticut, on the 7th day of February, 1997.
THE EASTERN COMPANY
By /s/ Stedman G. Sweet
-------------------------------
Stedman G. Sweet
(President and Chief
Executive Officer)
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated. By so
signing, each of the undersigned, in his or her capacity as a
director or officer, or both, as the case may be, of the
Registrant does hereby appoint Russell G. McMillen, Stedman G.
Sweet, Donald E. Whitmore, Jr., and each of them severally, or if
more than one acts, a majority of them, his or her true and
lawful attorneys or attorney to execute in his or her name, place
and stead, in his or her capacity as a director or officer or
both, as the case may be, of the Registrant any and all
amendments to said Registration Statement and post-effective
amendments thereto and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities
and Exchange Commission. Each of said attorneys shall have full
power and authority to do and perform in the name and on behalf
of each of the undersigned, in any and all capacities, every act
whatsoever requisite or necessary to be done in the premises as
fully, and to all intents and purposes, as each of the
undersigned might or could do in person, hereby ratifying and
approving the acts of said attorneys and each of them.
Signature Title Date
President and
/s/ Stedman G. Sweet Director (Chief February 7, 1997
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Stedman G. Sweet Executive Officer)
Vice President,
/s/ Donald E. Whitmore, Jr. Secretary, February 7, 1997
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Donald E. Whitmore, Jr. Treasurer, Chief
Financial Officer
and Director
/s/ John W. Everets Director February 7, 1997
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John W. Everets
Charles W. Henry Director February 7, 1997
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Charles W. Henry
Ole K. Imset Director February 7, 1997
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Ole K. Imset
Director 1997
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Leonard F. Leganza
Director 1997
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Russell G. McMillen
/s/ David C. Robinson Director February 7, 1997
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David C. Robinson
/s/ Donald S. Tuttle, III Director February 7, 1997
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Donald S. Tuttle, III
The Program. Pursuant to the requirements of the Securities
Act of 1933, the person who administers the Program has duly
caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the Town of
Naugatuck and State of Connecticut on the 7th day of February,
1997.
THE EASTERN COMPANY DIRECTORS FEE
PROGRAM
By /s/ Stedman G. Sweet
-------------------------------
Stedman G. Sweet
Its President and Chief
Executive Officer
Exhibit 4(a)
THE EASTERN COMPANY DIRECTORS FEE PROGRAM
1. Purpose. The purpose of this Program is to promote the
interests of The Eastern Company and its shareholders by providing a method
whereby the non-employee directors of the Company will become owners of the
Company's common stock through the payment of their quarterly retainer fees
and meeting fees in shares of Company common stock. The Program will increase
the proprietary interest of the non-employee directors in the Company's
business and in its continued success and progress, and will encourage
qualified individuals to become members of the Board of Directors of the
Company.
2. Definitions. As used herein, the following terms shall have
the following meanings:
(a) Board of Directors shall mean the board of directors of The
Eastern Company.
(b) Company shall mean The Eastern Company.
(c) Directors' Fees shall mean the sum of the retainer fees
payable by the Company or an affiliate of the Company to a Non-employee
Director for his services as a non-employee director of the Company or any
affiliate of the Company, plus any additional amounts payable to a Non-
employee Director for attendance at a meeting or meetings of the Board of
Directors of the Company or the board of directors of any affiliate of the
Company.
(d) Eastern Common Stock shall mean the common stock, no par
value, of The Eastern Company.
(e) Fair Market Value shall mean the reported price at which
Eastern Common Stock was last traded on the day on which such value is to be
determined (or, if there are no reported trades on such day, the last previous
day on which there was a reported trade).
(f) Non-employee Director shall mean a director of The Eastern
Company who is not an employee of the Company or any affiliate of the Company.
(g) Program shall mean The Eastern Company Directors Fee Program.
3. Administration. In order to administer the issuance of shares
of Eastern Common Stock to Non-employee Directors pursuant to the Program, the
Secretary of the Company shall take all steps necessary or desirable to carry
out the provisions of the Program. Subject to the express provisions of the
Program, the Secretary of the Company shall issue shares of Eastern Common
Stock to Non-Employee Directors at the time or times set forth in, and in
accordance with the terms of, the Program. Notwithstanding anything else
herein to the contrary, however, the Secretary of the Company shall exercise
no discretion regarding the administration of the Program, the time or times
when shares of Eastern Common Stock will be issued to the Non-employee
Directors, or the price at which such shares of Eastern Common Stock will be
issued to the Non-employee Directors.
4. Eligibility. Each Non-employee Director of the Company shall
be eligible to receive shares of Eastern Common Stock in accordance with the
terms of the Program.
5. Issuance of Shares of Eastern Common Stock.
(a) As of the last day of each calendar year quarter, the Company
shall issue to each Non-employee Director a number of shares of Eastern Common
Stock equal to the Directors' Fees payable to the Non-employee Director for
services performed from the date of the last previous issuance of shares of
Eastern Common Stock under the Program to the last day of the calendar year
quarter, divided by the Fair Market Value of Eastern Common Stock as of the
last day of the calendar year quarter.
(b) Notwithstanding the provisions of Section 5(a) of the Program,
the Board of Directors (or a committee of two or more non-employee directors
of the Company) may, in its sole discretion, elect to issue shares of Eastern
Common Stock as of the date of any meeting of the Board of Directors (or any
committee meeting of the Board of Directors). In such an event, the Company
shall issue to each Non-employee Director a number of shares of Eastern Common
Stock equal to the Directors' Fees payable to the Non-employee Director for
services performed from the date of the last previous issuance of shares of
Eastern Common Stock under the Program to the date of such meeting, divided by
the Fair Market Value of Eastern Common Stock as of the date of such meeting.
For purposes of this Section 5(b), a committee of two or more non-employee
directors shall mean a committee which is appointed by the Board of Directors
and which consists of two or more directors who satisfy the requirements of
Rule 16b-3(b)(3) issued by the Securities and Exchange Commission (the "SEC"),
as such rule may hereafter be amended.
(c) Fractional shares of Eastern Common Stock shall not be issued
to a Non-employee Director under the Program. In lieu of the issuance of a
fractional share of Eastern Common Stock, such fractional share will be
carried over and will be valued on the basis of the Fair Market Value of
Eastern Common Stock as of the next succeeding date on which shares of Eastern
Common Stock are issuable under the Program. The value of such fractional
share, as so determined, will then be added to the Directors' Fees otherwise
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payable on such date, and will be paid in shares of Eastern Common Stock in
accordance with the provisions of this Section 5.
(d) Shares of Eastern Common Stock issued under the Program shall
be fully vested and shall not be subject to any restrictions upon their sale,
assignment, transfer or other disposition (other than any restrictions on
transferability which are imposed by the securities laws of the United States
or any state).
(e) The Company shall issue to each Non-employee Director a
certificate or certificates representing the shares of Eastern Common Stock
issued under the Program. Upon issuance of such certificate or certificates,
the Non-employee Director shall thereupon be deemed to be a shareholder of the
Company with respect to all of the shares of Eastern Common Stock represented
by such certificate or certificates. The Non-employee Director shall
thereafter have, with respect to such shares of Eastern Common Stock, all of
the rights of a shareholder of the Company (including the right to vote the
shares of Eastern Common Stock and the right to receive any cash or stock
dividends on such shares of Eastern Common Stock).
6. Securities Law Considerations.
(a) By accepting the issuance of shares of Eastern Common Stock
under the terms of the Program, each Non-employee Director represents to the
Company that, by virtue of his position with the Company, such Non-employee
Director has access to the kind of financial and other information about the
Company as would be contained in a registration statement filed under the
Securities Act of 1933, as amended (the "Act").
(b) The provisions of this Section 6(b) shall apply to all shares
of Eastern Common Stock issued under the Program, except to the extent that,
in the opinion of counsel for the Company, such provisions are not required by
the Act or any applicable law, regulation or rule of any governmental agency.
In the absence of a registration statement under the Act which is
effective at the time of the issuance of shares of Eastern Common Stock under
the Program, each Non-employee Director, by accepting such shares, represents
and agrees for himself and his successors that all shares of Eastern Common
Stock acquired pursuant to the Program shall be acquired for investment
purposes only and not with a view to further distribution or for purposes of
resale in a manner which would require registration under the Act (or any
state securities law). Furthermore, each Non-employee Director agrees that
the shares, in the absence of such an effective registration statement, may be
marked with a legend reading as follows:
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"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have been acquired
for investment and may not be sold, transferred, pledged or hypothecated in
the absence of an effective registration statement for the shares under the
Securities Act of 1933 or an opinion of counsel to the Company that
registration is not required under said Act."
To the extent required by the securities laws, all shares issued under the
Program will be marked with the foregoing legend.
7. Amendment and Discontinuance. The Board of Directors may amend
or discontinue the Program at any time.
8. Continuance of Service as a Non-employee Director. The Program
shall not impose any obligation on the Company to retain any Non-employee
Director as a member of the Board of Directors of the Company or as a member
of the board of directors of any affiliate of the Company.
9. Tax Withholding. The Company shall have the power to withhold,
or require a Non-employee Director to remit to the Company, an amount
sufficient to satisfy any applicable Federal, state or local withholding tax
requirements with respect to any shares of Eastern Common Stock issued under
the Program. To the extent permitted under applicable tax, securities and
other laws, the Company may, in its sole discretion, permit the Non-employee
Director to satisfy a tax withholding requirement by directing the Company to
so apply shares of Eastern Common Stock issued to the Non-employee Director
under the Program.
10. Limits of Liability.
(a) Any liability of the Company to any Non-employee Director with
respect to the issuance of shares of Eastern Common Stock under the Program
shall be based solely upon the contractual obligations created by the Program.
(b) Neither the Company nor any member of the Board of Directors
of the Company, nor any other person participating in the administration of
the Program, shall have any liability to any party for any action taken or not
taken, in good faith, under the Program.
11. Governing Law. The Program shall be construed in accordance
with the laws of the State of Connecticut.
12. Effective Date.
(a) The Program shall become effective as of the date of its
adoption by the Board of Directors with respect to directors' fees payable on
or after October 1, 1996, provided, however, that the Company's shareholders
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approve the Program at a meeting held within twelve months of the date of
adoption of the Program by the Board of Directors.
(b) Prior to the approval of the Program by the shareholders of
the Company, any certificate or certificates which represent shares issued
under the Program shall be deposited in escrow with the Secretary of the
Company, together with a stock power or instrument of transfer appropriately
endorsed in blank. In the event that the shareholders of the Company approve
the Program within twelve months of the date of adoption of the Program by the
Board of Directors, the certificate or certificates shall be delivered to the
Non-employee Directors. However, if the shareholders of the Company do not
approve the Program within twelve months of the date of adoption of the
Program by the Board of Directors, the shares issued under the Program shall
be forfeited and the certificate or certificates shall be delivered to the
Company for cancellation.
While the certificate or certificates representing shares of Eastern
Common Stock are being held by the Secretary of the Company, the Non-employee
Director in whose name the certificate or certificates are registered shall
have, with respect to such shares, all of the rights of a shareholder of the
Company (including the right to vote the shares of Eastern Common Stock and
the right to receive any cash or stock dividends on such shares of Eastern
Common Stock). However, in the event the shares are forfeited because the
shareholders of the Company do not approve the Program within twelve months of
the date of its adoption by the Board of Directors, the Non-employee Directors
shall forthwith return to the Company all cash or stock dividends received on
such shares.
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Exhibit 5
February 4, 1997
Board of Directors
The Eastern Company
112 Bridge Street
P.O. Box 460
Naugatuck, CT 06770
Re: Issuance of Shares of The Eastern Company Common Stock Pursuant to The
Eastern Company Directors Fee Program
Dear Sirs:
As counsel for The Eastern Company, a Connecticut corporation (the
"Company"), we have participated with the Company and its officers in the
preparation for filing with the Securities and Exchange Commission ("SEC") of
the Registration Statement on Form S-8 (the "Registration Statement") covering
certain shares of common stock, no par value per share, of the Company (the
"Shares"). The Shares will be issued pursuant to The Eastern Company
Directors Fee Program (the "Program") in payment of the quarterly retainer
fees and meeting fees payable to the non-employee directors of the Company.
In connection with the filing of the Registration Statement, we have been
asked to give our opinion, in our capacity as counsel for the Company, as to
the legality of the Shares being registered, indicating whether the Shares,
when issued under the Program, will be legally issued, fully paid and non-
assessable.
In rendering this opinion, we have examined and relied upon originals or
copies, certified or otherwise, of all such corporate records, documents,
agreements or other instruments of the Company, and have made such
investigation of law, and have discussed with the officers of the Company such
questions of fact, as we have deemed necessary or appropriate. In rendering
this opinion, we have relied upon certificates and statements of officers and
directors of the Company as to factual matters, and we have assumed the
genuineness of all documents submitted as copies.
Board of Directors
The Eastern Company
February 4, 1997
Page 2
Relying on the matters stated above, and based upon and subject to the
foregoing, we are of the opinion that the Shares, when issued under the
Program, will be legally issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Company's Registration Statement on Form S-8.
Very truly yours,
/s/ John V. Galiette
----------------------------
John V. Galiette
JVG/hs
Exhibit 23(b)
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Interests of Named
Experts and Counsel" in the Registration Statement (Form S-8) and "Experts" in
the related Prospectus and Reoffer Prospectus, all pertaining to The Eastern
Company Directors Fee Program, and to the incorporation by reference in the
aforementioned Registration Statement of our report dated January 31, 1996,
with respect to the consolidated financial statements of The Eastern Company
included in its Annual Report (Form 10-K) for the year ended December 30,
1995, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
------------------------
ERNST & YOUNG LLP
Hartford, Connecticut
February 3, 1997
Exhibit 99(1)
REOFFER PROSPECTUS
THE EASTERN COMPANY
Common Stock
No Par Value Per Share
This prospectus (the "Prospectus") relates to certain shares of common
stock, no par value per share, of The Eastern Company (the "Common Stock"),
which may be issued pursuant to The Eastern Company Directors Fee Program (the
"Program") in payment of the quarterly retainer fees and meeting fees payable
to the non-employee directors of The Eastern Company (the "Company"). The
Company will receive no part of the proceeds from any sales of Common Stock to
be made on behalf of the Selling Shareholders. (See "Selling Shareholders"
herein for information concerning the several Selling Shareholders).
The Company's Common Stock is listed on the American Stock Exchange. On
January 31, 1997, the reported closing price per share of the Common Stock was
$12.875.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC") NOR HAS THE SEC PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE EASTERN COMPANY
112 BRIDGE STREET
P.O. BOX 460
NAUGATUCK, CONNECTICUT 06770
(203) 729-2255
The date of this Prospectus is February 7, 1997.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"SEC"). Such reports and other information concerning the Company can be
inspected and copied at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's Regional
Offices in New York (Seven World Trade Center, New York, New York 10048) and
Chicago (500 West Madison Street, Suite 1400, Chicago, Illinois 60061), and
copies of such material can be obtained from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Certain of such reports, proxy statements and other information is
also available from the SEC over the Internet at http://www.sec.gov.
The Company's Common Stock is listed on the American Stock Exchange.
Reports, proxy and information statements, in addition to other information
concerning the Company, can be inspected at the American Stock Exchange.
This Prospectus does not contain all information set forth in the
Registration Statement and Exhibits thereto which the Company has filed with
the SEC under the Securities Act of 1933 (the "1933 Act") and to which
reference is hereby made.
A copy of any document or part thereof which is incorporated into the
Registration Statement by reference shall be provided without charge to each
person to whom a Prospectus is delivered upon the written or oral request of
such person. Such requests for information should be directed to Donald E.
Whitmore, Jr., Secretary, The Eastern Company, 112 Bridge Street, P.O. Box
460, Naugatuck, Connecticut 06770, telephone (203) 729-2255.
The Company intends to distribute to its shareholders annual reports
containing financial statements which have been audited by its independent
auditors and quarterly reports containing unaudited financial information for
the first three quarters of each year.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such other information or representations must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer or solicitation by anyone in any state in which such offer or
solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. The delivery of this Prospectus
at any time does not imply that information herein is correct as of any time
subsequent to the date hereof.
-2-
THE COMPANY
The Eastern Company is a diversified manufacturer of locks and other
proprietary metal products, serving the security, underground mining,
specialty castings and commercial construction markets. It has its corporate
headquarters at 112 Bridge Street, Naugatuck, Connecticut 06770 and its
telephone number is (203) 729-2255.
Additional information concerning the Company is set forth in its most
recent Annual Report on Form 10-K, copies of which will be furnished, upon
request, to non-employee members of the Company's Board of Directors who are
determined to be eligible to participate in the Program.
SELLING SHAREHOLDERS
The following tables set forth information as of December 1, 1996 with
respect to those Selling Shareholders who have acquired or may acquire shares
of the Company's Common Stock under the Program.
To the best of the Company's knowledge, there is no understanding
between any of the Selling Shareholders and any securities broker or dealer
with respect to the sale of shares of Common Stock to which this Prospectus
relates.
All expenses (excluding commissions) in connection with the offering of
the shares being offered by this Prospectus will be paid by the Company. Such
expenses (excluding commissions but including registration fees, transfer
agent fees, printing costs and legal and accounting fees) are not expected to
exceed $5,000.00.
Restricted
Stock and
Shares of Shares of
Shares of Common Stock Common
Common Stock Issuable Under Stock
Name, Address Beneficially Outstanding Offered By
and Positions Held as of Options as of This
with the Company 12/1/96(1) 12/1/96 Prospectus
John W. Everets 0 11,250 11,250
72 Chestnut Street
Boston, MA 02108
(Director)
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Restricted
Stock and
Shares of Shares of
Shares of Common Stock Common
Common Stock Issuable Under Stock
Name, Address Beneficially Outstanding Offered By
and Positions Held as of Options as of This
with the Company 12/1/96(1) 12/1/96 Prospectus
Charles W. Henry 2,500 11,250 13,750
Ash Swamp Road
Woodbury, CT 06798
(Director)
Ole K. Imset 300 11,250 11,550
One Brentwood
Windham, NH 03087
(Director)
Leonard F. Leganza 3,000 11,250 14,250
62 Tunxis Village
Farmington, CT 06032
(Director)
Russell G. McMillen 108,306 0 108,306
96 Crest Road
Middlebury, CT 06762
(Director)
David C. Robinson 10,800 11,250 22,050
211 North Shore Road
New Preston, CT 06777-1123
(Director)
Donald S. Tuttle, III 600 11,250 11,850
250 White Deer Rock Road
Middlebury, CT 06762
(Director)
(1) Shareholdings include, in certain cases, shares owned by or in trust
for spouses and/or children, in which case all beneficial interest
has been disclaimed.
DESCRIPTION OF COMPANY COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of shareholders. Holders of common stock are
entitled: (a) to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor; and (b) in the event of the
liquidation, dissolution, or winding-up of the Company, to share pro rata the
-4-
remaining assets after payment of all debts, obligations, and liabilities.
Shareholders have no preemptive subscription or conversion rights. There are
no redemption or sinking fund provisions applicable to the Common Stock. The
Company's certificate of incorporation, as amended and restated, does not
provide for cumulative voting. The presently issued and outstanding shares of
Common Stock are, and the shares of Common Stock offered hereby by the Company
when issued and delivered as contemplated herein, will be, fully paid and
non-assessable.
EXPERTS
The consolidated financial statements of The Eastern Company
incorporated by reference in the Registration Statement have been audited by
Ernst & Young LLP, independent auditors, to the extent indicated in their
report thereon which is also incorporated by reference herein. Such financial
statements have been incorporated herein by reference in reliance on such
report given on the authority of such firm as experts in accounting and
auditing.
The validity of the issuance of the shares of common stock offered
hereby will be passed upon for the Company by Gager & Peterson, Waterbury,
Connecticut.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Program has been filed with the SEC as an exhibit to the
Registration Statement of which this Prospectus is a part and is incorporated
by reference herein. Reference should be made to the Program for a full and
complete statement of its respective provisions.
Also incorporated herein by reference are the Company's Annual Report on
Form 10-K for the fiscal year ending December 30, 1995, and the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 30, 1996,
June 29, 1996 and September 28, 1996, and the Company's Proxy Statement dated
March 22, 1996, all as filed with the SEC. All documents subsequently filed
by the Company with the SEC pursuant to Sections 13, 14, and 15(d) of the
Securities Exchange Act of 1934 prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold, or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of each such document.
The Company will provide upon request and without charge to each person
to whom this Prospectus is delivered a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents which
-5-
are not specifically incorporated therein by reference). Written requests
should be directed to:
Donald E. Whitmore, Jr.
The Eastern Company
112 Bridge Street
P.O. Box 460
Naugatuck, Connecticut 06770
Telephone requests may be directed to Mr. Whitmore at (203) 729-2255.
INDEMNIFICATION
Section 33-370 et seq. of the Connecticut General Statutes provides for
permissive indemnification, mandatory indemnification and court-ordered
indemnification of directors.
(A) A corporation may indemnify a director against liability
incurred in a pending, threatened or completed action, suit or proceeding if:
(1) he conducted himself in good faith; and (2) he reasonably believed (a) in
the case of conduct in his official capacity with the corporation, that his
conduct was in its best interests, and (b) in all other cases, that his
conduct was at least not opposed to its best interests; and (3) in the case of
any criminal proceeding, that he had no reasonable cause to believe that his
conduct was unlawful.
A corporation may not indemnify a director unless a determination has
been made that indemnification of the director is permissible because the
director has met the applicable standard of conduct. This determination must
be made either: (1) by a majority vote of the members of the board of
directors who are not parties to the proceeding; or (2) if a quorum cannot be
obtained, by a majority vote of a committee which is composed of two or more
directors who are not parties to the proceeding and which is designated by
vote of the directors who are not parties to the proceeding; or (3) by special
legal counsel selected by the directors or a committee of directors who are
not parties to the proceeding (or by the full board if a quorum of directors
not involved in the proceeding cannot be obtained); or (4) by vote of the
shareholders (although shares owned by directors who are parties to the
proceeding cannot vote).
Notwithstanding the above, however, a corporation may not indemnify a
director: (1) in connection with a proceeding by or in the right of the
corporation if the director was adjudged liable to the corporation; or (2) in
connection with any other proceeding charging improper personal benefit to
him, whether or not involving action in his official capacity, in which he was
-6-
adjudged liable on the basis that personal benefit was improperly received by
him.
Any indemnification permitted in connection with a proceeding by or in
the right of the corporation is limited to reasonable expenses incurred by the
director in connection with the proceeding. A corporation may advance
reasonable expenses incurred by a director in connection with a proceeding if:
(1) the director furnishes the corporation with a written affirmation of his
good faith belief that he has met the standard of conduct for receiving
indemnification; (2) the director furnishes the corporation with a written
undertaking to repay any advances if it is ultimately determined that he did
not meet the standard of conduct; and (3) the corporation determines that the
facts then known do not preclude indemnification.
(B) Unless limited by its article of incorporation, a corporation
shall indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding against reasonable expenses
incurred by him in connection with the proceeding.
(C) Unless a corporation's articles of incorporation provide
otherwise, a court may order a corporation to indemnify a director if the
director applies to the court for indemnification and the court determines
that: (1) the director is entitled to mandatory indemnification; or (2) the
director is fairly and reasonably entitled to indemnification in view of all
of the relevant circumstances, whether or not he met the standard of conduct
for permissive indemnification or was adjudged liable to the corporation.
However, if he was adjudged liable to the corporation, his indemnification
will be limited to only the reasonable expenses incurred.
The rules which apply above relating to the indemnification of directors
also apply to officers who are not directors of the corporation. In addition,
a corporation may indemnify and advance expenses to an officer, employee or
agent who is not a director to the extent, consistent with public policy, that
is permitted by its articles of incorporation, bylaws, general or specific
action of its board of directors, or contract.
Article Tenth of the Company's certificate of incorporation and Section
33-636(b)(4) of the Connecticut General Statutes limit the personal liability
of the Company's directors to the Company or its shareholders for monetary
damages for any failure on the part of the directors to exercise the requisite
degree of care in fulfilling their duties and responsibilities in their
capacity as directors. However, the protection does not extend to acts or
omissions of the directors that involve a knowing and culpable violation of
law, enable the director or an associate to receive an improper personal
economic gain, show a lack of good faith and a conscious disregard for the
-7-
duty of the director of the corporation under circumstances in which the
director was aware that his conduct or omission created an unjustifiable risk
of serious injury to the corporation, constitute a sustained and unexcused
pattern of inattention amounting to an abdication of the director's duty to
the corporation, or involve unlawful distributions to the director.
The Company's by-laws also require the indemnification of the Company's
directors and officers. Article VII, Section 7 of the by-laws provides that
each director and officer of the Company will be indemnified against losses
incurred by him with respect to any action, suit or proceeding to which he is
made a party by reason of his being a director or officer, unless he is
adjudged in such action, suit or proceeding to be liable for his own
misconduct in the performance of his duty as such director or officer. This
right of indemnification is in addition to any other such rights to which the
director or officer may, as a matter of law, be entitled.
The Company has also obtained directors' and officers' liability
insurance, the effect of which is to indemnify the directors and officers of
the Company against certain damages and expenses because of certain claims
made against them which are caused by their negligent act, error or omission.
- -8-
