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 1995 EXECUTIVE STOCK INCENTIVE PLAN
(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 250,000 $12.6875 $3,171,875 $961.17
(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 5, 1997, multiplied by 250,000, a good faith estimate of
the aggregate number of shares of Common Stock of the Registrant to be issued
pursuant to the Plan.
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 1995 Executive Stock Incentive Plan
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.
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(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.
(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
/s/ Stedman G. Sweet
- -------------------- President and
Stedman G. Sweet Director (Chief February 7, 1997
Executive Officer)
Vice President,
/s/ Donald E. Whitmore, Jr. Secretary, February 7, 1997
- ---------------------------- Treasurer, Chief
Donald E. Whitmore, Jr. Financial Officer
and Director
/s/ John W. Everets
- -------------------- Director February 7, 1997
John W. Everets
/s/ Charles W. Henry
- --------------------- Director February 7, 1997
Charles W. Henry
/s/ Ole K Imset
- ----------------- Director February 7, 1997
Ole K. Imset
- ----------------------- Director 1997
Leonard F. Leganza
- ------------------------ Director 1997
Russell G. McMillen
/s/ David C. Robinson
- ---------------------- Director February 7;, 1997
David C. Robinson
/s/ Donald S. Tuttle, III
- -------------------------- Director February 7, 1997
Donald S. Tuttle, III
The Plan. Pursuant to the requirements of the Securities
Act of 1933, the person who administers the Plan 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 1995 EXECUTIVE
STOCK INCENTIVE PLAN
By /s/ Stedman G. Sweet
-----------------------
Stedman G. Sweet
Its President and Chief
Executive Officer
Exhibit 4(a)
Includes Amendment No. 1
THE EASTERN COMPANY
1995 EXECUTIVE STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Plan is to promote the interests of The
Eastern Company and its shareholders by providing a method whereby executives
and other key employees of the Company may become owners of the Company's
common stock by the exercise of Incentive Stock Options or Non-qualified Stock
Options or the grant of shares of Restricted Stock, and thereby increase their
proprietary interest in the Company's business, encourage them to remain in
the employ of the Company and increase their personal interest in its
continued success and progress. In addition, another purpose of the Plan is
to promote the interests of the Company by providing a method whereby
non-employee directors of the Company may become owners of the Company's
common stock by the exercise of Non-qualified Stock Options, and thereby
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) Award shall mean the grant of an Incentive Stock Option, a Non-
qualified Stock Option or Restricted Stock as authorized by Section 4.
(b) Award Agreement shall mean an agreement described in Section 7 of the
Plan which is entered into between the Company and an Employee or a Non-
employee Director and which sets forth the terms, conditions and limitations
applicable to an Award granted hereunder.
(c) Board shall mean the board of directors of The Eastern Company.
(d) Code shall mean the Internal Revenue Code of 1986, as amended.
(e) Committee shall mean the Incentive Compensation Committee of the
Board or any successor committee with substantially the same responsibilities.
(f) Company shall mean The Eastern Company and each "parent or subsidiary
corporation" of The Eastern Company (as those terms are defined in Section 424
of the Code).
(g) Disability shall mean the inability of an Employee or Non-employee
Director to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death and which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months, as defined in Section
22(e)(3) of the Code.
(h) Eastern Common Stock shall mean the common stock, no par value, of
The Eastern Company.
(i) Employee shall mean an employee of the Company.
(j) 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).
(k) Incentive Stock Option shall mean a Stock Option which complies with
all of the requirements for incentive stock options set forth in Section 422
of the Code and which may be issued pursuant to Section 6.1.
(l) Non-employee Director shall mean a director of The Eastern Company
who is not an Employee.
(m) Non-qualified Stock Option shall mean a Stock Option which does not
comply with all of the requirements for incentive stock options set forth in
Section 422 of the Code and which may be issued pursuant to Section 6.1 or
Section 6.3.
(n) Restricted Stock shall mean shares of Eastern Common Stock which have
certain restrictions attached to the ownership thereof and which may be issued
pursuant to Section 6.2.
(o) Stock Option shall mean a right granted pursuant to the Plan to
purchase a specified number of shares of Eastern Common Stock at a specified
price during a specified period of time. Stock Options may be either
Incentive Stock Options or Non-qualified Stock Options.
3. Administration.
(a) In order to administer the issuance of Awards to Employees pursuant to
the Plan, there shall be a Committee which is appointed by the Board and which
consists of not less than three non-employee directors of the Company, each of
whom shall be a "disinterested person" as defined in Rule 16b-3 promulgated by
the Securities and Exchange Commission, as it may be amended from time to
time. Subject to the express provisions of the Plan, the Committee shall
select the Employees to be granted Awards, shall determine the number of
shares subject to each Award, shall determine the time or times when each
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Award will be granted, shall determine the time or times within which any
Stock Options may be exercised or any restrictions on shares of Restricted
Stock may lapse, and shall determine the form and content of the Award
Agreements (including, but not limited to, such terms, conditions and
limitations as the Committee may deem to be required by applicable law).
The Committee shall have full power and authority, subject to such orders
or resolutions not inconsistent with the provisions of the Plan as may from
time to time be issued or adopted by the Board, to interpret the provisions of
the Plan and administer the issuance of Awards to Employees under the Plan.
All decisions of the Committee hereunder shall be either by the affirmative
vote of a majority of the members of the Committee at a meeting called for
such purpose or by a writing signed by all of the members of the Committee.
Subject to any applicable provisions of the Company's bylaws, all such
decisions shall be final and binding on all persons including the Company, its
shareholders, employees and optionees.
(b) In order to administer the issuance of Non-qualified Stock Options to
Non-employee Directors pursuant to the Plan, the Secretary of the Company
shall take all steps necessary or desirable to carry out the provisions of the
Plan. Subject to the express provisions of the Plan, the Secretary of the
Company shall issue Non-qualified Stock Options to Non-employee Directors at
the time or times set forth in, and in accordance with the terms of, the Plan,
and shall determine the form and content of the Award Agreements (including,
but not limited to, such terms, conditions and limitations as the Secretary
shall deem to be required by the Plan or applicable law). Notwithstanding
anything else herein to the contrary, the Secretary of the Company shall
exercise no discretion regarding the administration of the grant of
Non-qualified Stock Options to Non-employee Directors, the eligibility of
Non-employee Directors to participate in the Plan, the time when Non-qualified
Stock Options shall be granted to such Non-employee Directors, the number of
shares subject to such Non-qualified Stock Options, the option price, or the
term of such options.
4. Eligibility.
(a) The Employees who shall be eligible to participate in the Plan and
receive Incentive Stock Options, Non-qualified Stock Options and/or shares of
Restricted Stock shall consist of those salaried officers and other key
employees (whether or not directors) of the Company who are selected by the
Committee.
More than one Award may be granted to the same Employee. An Award intended
as an Incentive Stock Option shall not be granted under this Plan to an
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Employee who, at the time of such grant, owns (actually and constructively)
more than ten percent (10%) of the Eastern Common Stock unless the purchase
price of the shares subject to such Incentive Stock Option is at least one
hundred ten percent (110%) of the fair market value of the shares at the time
of the granting of the Incentive Stock Option and the Incentive Stock Option
is not exercisable after the expiration of five (5) years from the date it is
granted.
(b) Each Non-employee Director of the Company who is first elected to the
Board on or after the date on which this Plan is approved by the shareholders
of the Company shall automatically be granted, on the first business day of
the calendar month following his election, a Non-qualified Stock Option to
purchase 11,250 shares of Eastern Common Stock. Notwithstanding anything else
herein to the contrary, a Non-employee Director elected to consecutive terms
of office shall not be granted a Non-qualified Stock Option upon his
reelection. However, a Non-employee Director elected to non-consecutive terms
of office shall be granted a Non-qualified Stock Option upon his reelection
following the period during which he was not a member of the Board.
The Non-qualified Stock Options granted to a Non-employee Director of the
Company under the terms of this Plan shall be in lieu of any Non-qualified
Stock Options which the Non-employee Director may be eligible to receive under
the terms of The Eastern Company 1989 Executive Stock Incentive Plan (the
"1989 Plan"). On and after the date of adoption of this Plan, no Non-
qualified Stock Options will be granted to any Non-employee Directors under
the terms of the 1989 Plan.
5. Shares Subject to the Plan. The shares subject to the Awards granted
under this Plan shall be authorized but unissued shares, or treasury shares,
of Eastern Common Stock. The total amount of Eastern Common Stock which may
be issued under Awards granted under this Plan shall not exceed in the
aggregate 250,000 shares. If an Award lapses, expires, terminates, ceases to
be exercisable or is forfeited in whole or in part, or if any stock acquired
pursuant to any Award (other than one intended as an Incentive Stock Option)
is reacquired by the Company without the payment of consideration, the shares
subject to but not issued under such Award or so reacquired shall be available
for the grant of other Awards.
6. Awards. Awards may include those described in this Section 6.
6.1 Stock Options for Employees.
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(a) The purchase price of the shares subject to each Incentive Stock
Option granted to an Employee shall not be less than one hundred percent
(100%) of the Fair Market Value of Eastern Common Stock at the time of the
granting of the Stock Option. The purchase price of the shares subject to
each Non-qualified Stock Option granted to an Employee shall be established by
the Committee at the time of the granting of the Non-qualified Stock Option.
(b) The term of a Stock Option granted to an Employee shall expire on
such date as is determined by the Committee; provided, however, that no
Incentive Stock Option shall be exercisable in whole or in part after ten
years from the date it is granted.
Each Stock Option granted under this Plan may be exercised only during
the continuation of the optionee's employment with the Company, except as
provided in Section 6.1(c) hereof. The Committee may, in its discretion,
provide that a Stock Option granted to an Employee may not be exercised in
whole or in part for any period or periods of time specified by the Committee.
An Employee's exercise of a Non-qualified Stock Option shall not affect
the exercise of any Incentive Stock Option.
(c) Any Stock Option, the period of which has not theretofore expired,
shall terminate at the time of the death of the optionee, or at the time of
the termination for any reason of his employment with the Company, and no
shares may thereafter be issued pursuant to such Stock Option; provided,
however, that, subject to the condition that no Incentive Stock Option may be
exercised in whole or in part after ten years from the date it is granted:
(i) upon such a termination of employment (other than by death), the
optionee may, within three months after the date of such termination, exercise
such Stock Option in whole or in part; provided, however, that: (A) if such
termination is due to Disability, such three month period shall be extended to
one year; and (ii) if an optionee terminates employment due to retirement at
or after attaining age sixty-five (65), such three month period shall be
extended to one year; and
(ii) upon the death of any optionee either prior to such a
termination of employment, or within the three month or one year period
referred to in (i) above, such optionee's estate or the person or persons to
whom such optionee's rights under the Stock Option are transferred by will or
the laws of descent and distribution may, within one year after the date of
such optionee's death, exercise such Stock Option in whole or in part.
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(d) The purchase price of each share shall, at the time of exercise of
any Stock Option, be paid in full in cash, or with previously acquired shares
of Eastern Common Stock having an aggregate fair market value at such time
equal to the purchase price, or in cash and such shares. Notwithstanding the
above, in connection with the exercise of an Incentive Stock Option, payment
with shares of Eastern Common Stock which constitute "statutory option stock"
(as defined in Section 424(c)(3)(B) of the Code) and which were previously
acquired by the optionee by the exercise of options granted under the Plan or
any other stock option plan shall be permitted only if the date of such
payment is at least two years from the date of grant of the options under the
Plan or such other stock option plan and such shares were held by the optionee
for at least one year.
(e) Upon the exercise of a Stock Option, a certificate or certificates
representing the shares of Eastern Common Stock so purchased shall be
delivered to the person entitled thereto.
(f) An optionee shall have no rights as a shareholder with respect to
shares subject to his Stock Option until such shares are issued to him and are
fully paid, and no adjustment will be made for dividends or other rights for
which the record date is prior thereto.
(g) Each Stock Option granted under this Plan shall by its terms be
non-transferable by the optionee other than by will or the laws of descent and
distribution and, during the lifetime of the optionee, be exercisable only by
him.
6.2 Restricted Stock for Employees.
(a) Restricted Stock are shares of Eastern Common Stock that are
issued to an Employee and are subject to such terms, conditions and
restrictions as the Committee deems appropriate. Such terms, conditions and
restrictions may include, but are not limited to, restrictions upon the sale,
assignment, transfer or other disposition of the Restricted Stock. The
Committee may provide for the lapse of any such terms, conditions and
restrictions, or may waive any such terms, conditions or restrictions, based
on such factors or criteria as the Committee may determine.
(b) If an Employee receives a grant of Restricted Stock, and if the
Employee desires to accept such grant, then the Employee shall pay to the
Company, in cash, an amount determined by the Committee. In the event of the
grant of Restricted Stock representing issued shares of Eastern Common Stock
or shares of Eastern Common Stock having no par value, such amount may be
greater than or equal to zero. In the event of the grant of Restricted Stock
representing authorized but unissued shares of Eastern Common Stock having a
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par value, such amount shall not be less than the par value of the shares of
Restricted Stock so granted. Such amount may be paid at any time prior to the
sixtieth (60th) day following the lapse of the restrictions applicable to the
shares of Restricted Stock.
(c) After receipt of any payment required by the Committee in
connection with the grant of shares of Restricted Stock, or as of the date of
grant of shares of Restricted Stock if no such payment is required, then the
Company shall issue to the Employee a certificate or certificates representing
the shares of Restricted Stock so granted. The certificates shall be
imprinted with a legend stating that the shares of Eastern Common Stock
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms of
this Plan, and each transfer agent of the Eastern Common Stock shall be
informed of such restrictions. In aid of such restrictions, the Employee
shall, immediately upon receipt of the certificate or certificates, deposit
such certificate or certificates (together with a stock power or instrument of
transfer appropriately endorsed in blank) with the Secretary of the Company to
be held in escrow. In the event the restrictions applicable to such shares of
Restricted Stock lapse, the certificate or certificates shall be delivered to
the Employee free and clear of all such restrictions. In the event the shares
of Restricted Stock are forfeited, the certificate or certificates shall be
delivered to the Company.
(d) Upon issuance of a certificate or certificates representing shares
of Restricted Stock in accordance with the provisions of Section 6.2(c), the
Employee shall thereupon be deemed to be a shareholder with respect to all of
the shares of Eastern Common Stock represented by such certificate or
certificates. The Employee shall thereafter have, with respect to such shares
of Restricted Stock, all of the rights of a shareholder of the Company
(including the right to vote the shares of Restricted Stock and the right to
receive any cash or stock dividends on such Restricted Stock).
(e) In the event that an Employee terminates his employment with the
Company, then any shares of Restricted Stock still subject to restrictions on
the date of such termination of employment shall automatically be forfeited.
(f) Each share of Restricted Stock granted under this Plan shall by
its terms be non-transferable by the Employee, other than by will or the laws
of descent and distribution, until the restrictions applicable to such shares
have lapsed. While shares of Restricted Stock remain subject to restrictions,
all rights with respect to such shares shall be exercisable during an
Employee's lifetime only by him.
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6.3 Non-qualified Stock Options for Non-employee Directors
(a) The purchase price of the shares subject to each Non-qualified
Stock Option granted to a Non-employee Director shall be one hundred percent
(100%) of the Fair Market Value of Eastern Common Stock at the time of the
granting of the Stock Option.
(b) The term of a Non-qualified Stock Option granted to a Non-employee
Director shall expire ten years and one month from the date it is granted.
Each Non-qualified Stock Option granted to a Non-employee Director under
this Plan may be exercised only during the continuation of the optionee's
service as a Non-employee Director, except as provided in Section 6.3(c)
hereof. A Non-qualified Stock Option granted to a Non-employee Director may
be exercised in whole at any time, or in part from time to time, during its
term.
(c) Any Non-qualified Stock Option granted to a Non-employee Director,
the period of which has not theretofore expired, shall terminate at the time
of the death of the optionee, or at the time of the termination of his service
as a member of the Board, and no shares may thereafter be issued pursuant to
such Stock Option; provided, however, that, subject to the condition that no
Non-qualified Stock Option granted to a Non-employee Director may be exercised
in whole or in part after ten years and one month from the date it is granted:
(i) upon such a termination of service as a director (other than by
death), the optionee may, within three months after the date of such
termination, exercise such Stock Option in whole or in part; provided,
however, that: (A) if such termination is due to Disability, such three month
period shall be extended to one year; and (ii) if an optionee terminates
service as a director at or after attaining age sixty-five (65), such three
month period shall be extended to one year with respect to any Non-qualified
Stock Options granted to the optionee as the result of his service as a Non-
employee Director; and
(ii) upon the death of any optionee either prior to such a
termination of service as a director, or within the three month or one year
period referred to in (i) above, such optionee's estate or the person or
persons to whom such optionee's rights under the Non-qualified Stock Option
are transferred by will or the laws of descent and distribution may, within
one year after the date of such optionee's death, exercise such Non-qualified
Stock Option in whole or in part.
-8-
(d) The purchase price of each share shall, at the time of exercise of
any Non-qualified Stock Option, be paid in full in cash, or with previously
acquired shares of Eastern Common Stock having an aggregate fair market value
at such time equal to the purchase price, or in cash and such shares.
(e) Upon the exercise of a Non-qualified Stock Option, a certificate
or certificates representing the shares of Eastern Common Stock so purchased
shall be delivered to the person entitled thereto.
(f) An optionee shall have no rights as a shareholder with respect to
shares subject to his Non-qualified Stock Option until such shares are issued
to him and are fully paid, and no adjustment will be made for dividends or
other rights for which the record date is prior thereto.
(g) Each Non-qualified Stock Option granted to a Non-employee Director
under this Plan shall by its terms be non-transferable by the optionee other
than by will or the laws of descent and distribution and, during the lifetime
of the optionee, be exercisable only by him.
7. Award Agreements. Each Award granted under this Plan shall be
evidenced by an Award Agreement setting forth the number of shares of Eastern
Common Stock subject to the Award, and such other terms and conditions
applicable to the Award as are required by or are consistent with the terms of
the Plan. By acceptance of an Award, each Employee or Non-employee Director
(as the case may be) thereby agrees to such terms and conditions and to the
terms of this Plan pertaining thereto.
8. Term of Plan. This Plan shall terminate ten years after the date of
its approval by the shareholders of the Company or its adoption by the Board,
whichever date is earlier, or upon any earlier termination date established by
action of the Board, and no Awards shall be granted thereafter. Such
termination shall not affect the validity of any Awards then outstanding.
9. Exercise of Awards.
(a) The exercise of any Award shall be by written notice to the Committee
which shall contain the following statement:
"By virtue of my position with The Eastern Company, I have access to the
kind of financial and other information about The Eastern Company as would be
contained in a registration statement filed under the Securities Act of 1933."
-9-
(b) In the absence of an effective registration statement under the
Securities Act of 1933, as amended, (the "Act") at the time of the grant of an
Award, each Employee or Non-employee Director (as the case may be), by
accepting the Award, represents and agrees for himself, his estate and his
transferees by will or under the laws of descent and distribution that all
shares of stock acquired pursuant thereto shall be acquired for investment and
not with a view to further distribution or for purposes of resale. Exercise
of any Award shall be by written notice which, in the absence of an effective
registration statement under the Act, shall contain a statement in
substantially the following form:
"I am acquiring these shares for my own account for investment and not with
a view toward distribution in a manner which would require registration under
the Securities Act of 1933, and I do not presently have any reason to
anticipate any change in my circumstances or other particular occasion or fact
which would cause me to sell the shares being acquired. I agree that the
certificates representing these shares, in the absence of such an effective
registration statement, may be marked with a legend reading as follows:
'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 acquired pursuant
to any Award shall be marked with the foregoing legend.
10. Adjustment of Shares Subject to Award and Exercise Price.
(a) Subject to any required action by the Company's shareholders, the
number of shares of Eastern Common Stock subject to each outstanding Award,
and the exercise price per share thereof in each such Award, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Eastern Common Stock resulting from a subdivision or consolidation
of shares or the payment of a stock dividend (but only on such common stock)
or any other increase or decrease in the number of such shares effected
without receipt of full consideration by the Company.
-10-
(b) Subject to any required action by the Company's shareholders, the
aggregate number of shares of Eastern Common Stock subject to this Plan shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Eastern Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on such
common stock) or any other increase or decrease in the number of such shares
effected without receipt of full consideration by the Company.
(c) Subject to any required action by the Company's shareholders, if the
Company shall be the surviving corporation in any reorganization or
consolidation, each outstanding Award shall pertain to and apply to the
securities to which a holder of the number of shares of Eastern Common Stock
subject to the Award would have been entitled as a result of such
reorganization or consolidation.
(d) In the event of a change in Eastern Common Stock, as presently
constituted, which is limited to a change of all of its authorized shares into
the same number of shares with par value or with a different par value or
without par value, the shares resulting from any such change shall be deemed
to be the common stock subject to the Plan.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board whose
determination in that respect, including any determination of the value of
consideration received for shares, shall be final, binding and conclusive;
provided, however, that no Incentive Stock Option granted pursuant to this
Plan shall be adjusted in a manner that causes the Stock Option to fail to
continue to qualify as an Incentive Stock Option within the meaning of Section
422 of the Code.
11. Amendments and Discontinuance. The Board may amend, suspend or
discontinue the Plan, but may not, without the prior approval of the Company's
shareholders, make any amendment which operates: (a) to abolish the
Committee, change the qualification of its members or withdraw its authority
to interpret or administer the Plan as regards the issuance of Awards to
Employees; (b) to make any material change in the class of eligible Employees
or Non-employee Directors under the Plan; (c) to increase the total number of
shares for which Awards may be granted under the Plan except as permitted by
the provisions of Section 10 hereof; (d) to extend the term of the Plan; (e)
to extend the maximum Incentive Stock Option period or to change the
Non-qualified Stock Option period for Non-employee Directors; or (f) to
decrease the minimum Incentive Stock Option price or to change the
Non-qualified Stock Option price for Non-employee Directors.
-11-
Notwithstanding the above, however, in no event may the Board amend any of
the following provisions of the Plan more than once every six months (other
than to comply with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the rules thereunder): (a) the
provisions of Section 4(b) of the Plan designating those Non-employee
Directors who will be granted Non-qualified Stock Options under the Plan, the
date on which the options will be granted, and the number of shares subject to
the options; and (b) the provisions of Section 6.3 setting the purchase price
of the shares subject to the Non-qualified Stock Options.
12. Continuance of Employment. Neither the Plan nor the granting of any
Award hereunder shall impose any obligation to continue the employment of any
Employee by the Company or retain any Non-employee Director as a member of the
Board.
13. Tax Withholding. The Company shall have the power to withhold, or
require an optionee to remit to the Company, an amount sufficient to satisfy
Federal, state and local withholding tax requirements on any Award granted
under the Plan. To the extent permissible under applicable tax, securities
and other laws, the Company may, in its sole discretion, permit the Employee
or the Non-employee Director (as the case may be) to satisfy a tax withholding
requirement by directing the Company to apply shares of Eastern Common Stock
to which he is entitled as a result of the exercise of a Stock Option or the
lapse of restrictions on shares of Restricted Stock.
14. Required Notifications by Optionee. If any optionee shall dispose of
shares of Eastern Common Stock issued pursuant to the exercise of an Incentive
Stock Option under the circumstances described in Section 421(b) of the Code
(whereby the optionee makes a disqualifying disposition of the shares before
expiration of the applicable holding periods), then such optionee shall notify
the Company of such disqualifying disposition within ten days of the
disposition.
15. Limits of Liability.
(a) Any liability of the Company to any Employee or Non-employee Director
with respect to an Award shall be based solely upon the contractual
obligations created by the Plan and the Award Agreement.
(b) Neither the Company, nor any member of the Board or the Committee,
nor any other person participating in the determination of any question under
the Plan or the interpretation, administration or application of the Plan,
-12-
shall have any liability to any party for any action taken or not taken, in
good faith, under the Plan.
16. Governing Law. The Plan, and all Award Agreements hereunder, shall
be construed in accordance with the laws of the State of Connecticut.
17. Effective Date. The Plan shall become effective only if and when
approved by the Company's shareholders at their annual meeting to be held on
April 26, 1995.
-13-
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 1995 Executive Stock Incentive Plan
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 1995
Executive Stock Incentive Plan (the "Plan") upon the grant of certain shares
of restricted stock or upon the exercise of certain stock options to be
granted under the Plan.
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 granted under the Plan as shares of restricted stock or when acquired by
the holders of options granted under the Plan, 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 granted under the Plan
as shares of restricted stock or when acquired by the holders of options
granted under the Plan, 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 1995 Executive Stock Incentive Plan, 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 upon the grant of shares of restricted stock or upon the
exercise of stock options granted under The Eastern Company 1995 Executive
Stock Incentive Plan (the "Plan"). The Eastern Company (the "Company") will
receive no part of the proceeds from the 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 employees and non-employee members of the Company's Board of
Directors who are determined to be eligible to participate in the Plan.
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 Plan.
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
Stedman G. Sweet 50,994 30,000 80,994
31 Woodbury Road
Watertown, CT 06795
(President, Chief
Executive Officer
and Director)
-3-
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
Donald E. Whitmore, Jr. 20,376 18,000 38,376
99 Deerbrooke Circle
Southington, CT 06489
(Vice President,
Secretary, Treasurer,
Chief Financial Officer
and Director)
John W. Everets 0 11,250 11,250
72 Chestnut Street
Boston, MA 02108
(Director)
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)
-4-
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
Frank J. Breker 1,113 15,000 16,113
Brian D. Reed 295 5,000 5,295
Raymond L. Wright 20,605 12,343 32,948
Robert G. Alexander 2,500 12,500 15,000
Thomas D. Melkus 2 2,500 2,502
(1) Shareholdings include, in certain cases: (a) shares held under The
Eastern Company Savings and Investment Plan; and (B) shares owned by or
in trust for spouses and/or children (in which case all beneficial
interest has been disclaimed).
Certain unnamed non-affiliates of the Company, each of whom holds the
lesser of 1,000 shares or 1% of the shares issuable under the Plan, may use
this Prospectus for reoffers and resales of such shares.
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
-5-
liquidation, dissolution, or winding-up of the Company, to share pro rata the
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 Plan 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 Plan 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
-6-
incorporated herein by reference (other than exhibits to such documents which
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
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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 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
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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 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.
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